Buying a condo

Buying a condo is a major financial decision, and one of the largest purchases one is likely to make. It's also more complex than buying a freehold property.Forum member Bylo, post in topic "Downsizing Your House in Retirement: Tips and Considerations", Financial Wisdom Forum, March 3, 2023, accessed March 10, 2023. Therefore, beyond the usual real estate selection criteria such as location, size (square footage), amenities and so on, an unusual amount of due diligence is required, covering physical, financial and legal aspects.Canada Mortgage and Housing Corporation (CMHC), Condominium buyer's guide, viewed March 12, 2023.
==Condo-specific concepts==
===Co-ownership===
A condominium is a divided co-ownership. So you are buying an apartment (housing) unit, for your exclusive use. But you also own of a portion of the common areas, such as the roof, windows, hallways, elevators, recreational facilities, gardens and so on.CAA Québec, What should you consider before buying a condo?, viewed March 12, 2023. In addition, areas such as a parking spot and a storage space are common areas, but might be reserved for your exclusive use.La Presse, Ce qu’il faut savoir avant d’acheter un condo, November 16, 2022, viewed March 13, 2023.
In legal terms, you are joining a condominium corporation ("strata corporation" in BC; "syndicate of co-owners" in Quebec). Buying a condo means that you are bound by the co-ownership agreement, a.k.a the "declaration of co-ownership".
===Rules and bylaws===
Some jurisdictions distinguish bylaws from rules, and others don't.
Bylaws exlain how the condominium corporation is to be run: how are the directors elected, how the rules are decided, etc.
Rules -- which might be included declaration of co-ownership but also be found in a separate document -- focus on day-to-day concerns. Rules can cover things like:Chambre des notaires du Québec, Condo: ce qu’il faut savoir avant d’acheter, Protégez Vous, February 22, 2019, viewed March 13, 2023.
*the maximum number of occupants per unit
*whether you can bring domestic animals (pets)
*when you may use certain amenities
*whether you can have a barbecue on your balcony
*whether you can change the type of floor covering in your unit
*what noise levels are acceptable, etc.
===Condo fees and reserve fund===
Common expenses, shared by the co-owners, are called condo fees or strata fees. These cover administrative costs and maintenance of the common areas. This includes the corporation’s insurance policies, and services like snow removal.
A portion of the condo fees generally goes to a reserve fund (contingency fund) to pay for major work on the common areas. A frequently reported issue is that the reserve fund is not high enough to cover future costs, whether planned or not. This can results in "special assesments", i.e. unpredictable bills.
Some jurisdictions (provinces) have detailed rules about reserve funds; in other jurisdictions, reserve funds are not mandatory.
===Condo board===
A condo board of directors (strata council in BC) is elected by the co-owners to run the condominium corporation (or syndicate in Quebec).BC Government, Strata corporations, viewed March 13, 2023.Condolegal.com, What is a syndicate of co-owners?, viewed March 13, 2023. The board sets bylaws and rules that control how the complex is managed and what individual owners can and cannot do.Vancouver Sun, Due diligence is crucial when buying a condo, July 15, 2019, viewed March 12, 2023. 
The general aim of the board should be that the building is well managed, that rules are followed, and that the quality of the building is maintained, to preserve the resale value of the units.
The board takes many decisions, but some can only be taken at an owners’ meeting (e.g., annual general meeting).
===Property manager===
Some condo boards hire a property management firm to handle their daily operations, such as:
*collection of monthly fees and any special fees
*cleaning and maintenance of common areas
*payment of common area utility bills
*operation and maintenance of heating, air-conditioning and other building systems
*snow and garbage removal
Other properties are self-managed.
==Due diligence==
It is important to do a lot of due diligence on a potential condo purchase. As with businesses in general, some are well run and others aren't. 
* Read the declaration of co-ownership, the rules and the bylaws
* Ask for minutes of the general meetings of the condo board from previous years
:You may discover problems with the building’s management, administration or condition, or with the neighbourhood. Does maintenance seem minimal? Is there a dispute with the builder? Do some co-owners – perhaps even your future immediate neighbour – violate noise regulations? It’s better to have this information before buying! 
* Look at financial statements and make sure the condo budget balances
* Evaluate the reserve fund (read the latest reserve fund study)
For new buildings, there's a perverse incentive for condo builders to cut corners because once they turn the development over to the condo corporation, they can wash their hands from liability from defects.
Due diligence is particularly important in older buildings that are coming up for major repairs like new roofs, heating, ventilation, and air conditioning (HVAC), elevators, etc. If you're not careful you could buy into a complex that's about to impose a hefty "special assessment" to make up for underfunding their reserve fund in the past.
It is recommended to engage a lawyer who's experienced in condo law to get and vet all the relevant documentation (declaration of co-ownership, by-laws, rules, estoppel certificate, reserve fund study, etc.) The cost of their review and discussion with you will be trivial if it helps you avoid buying into the wrong property.
==Learning and resources==
Legal and some practical aspects of condo ownership can be province-specific.
===British Columbia===
Information on Strata housing is available from the BC government.
The Condominium Home Owners Association of BC (CHOA) is non-profit association that offers bulletins, seminars, etc.
===Ontario===
The Condominum Authority of Ontario has a Residential Condominium Buyers’ Guide and also offers free Director training courses. The latter can be useful even for those not intending to be a director in the condo corporation, since the course covers what you need to know as an owner.
===Quebec===
The Regroupement des gestionnaires et copropriétaires du Québec (RGCQ) is a non-profit organization which "helps co-owners, administrators and condominium managers to ensure good governance of their buildings". They offer books, guides, and training sessions, some of which are free.
===Other provinces===
===Serving on the board===
One way to reduce the likelihood that your board will be "taken over" by rogues is to run for office yourself. That's also a great way to get an education on how condo corps actually run.
Potential issues with 'bad' condo boards include fraud, kickbacks, conflicts of interest, condo fees that are too high (budget surplus leading to spending on "luxuries") or too low (budget deficits leading to maintenance deficits), and so on.Ontario Condo Information Center, Issues with Boards of Directors and Condo Fraud, Kickbacks and Conflict of Interest, viewed March 13, 2023.
==See also==
*Owning vs renting
==References==
==External links==
CMHC's condominium buyer's guide:
*Chapter 4 Buying a condominium 
*Checklists, tips and FAQ's for condominium buyers
Category:Personal finance
Category:Real estate