If the purchase of a condo is in your plans, Chartered Accountant Stephen Chesney, Partner, Parker Garber & Chesney LLP in Richmond Hill says it all starts with research.
“Ask questions, and make sure you get answers. Purchasing a condominium is very different from purchasing a house. With a condo, you are buying into a community that is governed by legislation. Make sure you understand your obligations as an owner.”
Once you’ve determined you like the appearance and location of the condominium, Chesney suggests you also look into the financial and management side of condo ownership. Here are his tips:
Check the amenities. Be aware of what you are buying – if you are not going to use the pool or squash court, you are still paying for them in your monthly condo fee. The more amenities, the more expensive the upkeep, both today and in the future.
How old is the condominium? If it is brand new, check the reputation and experience of the builder. Consult the Tarion Warranty Corporation ([url=http://www.tarion.com/home/]http://www.tarion.com/home/[/url]), which licenses all new home and condominium builders in Ontario.
If it is an existing condo, investigate its history. Is it well managed and maintained? Is there a pattern of special assessments?
Check the monthly fees, and understand what they cover. If it is a new condo, be prepared for the possibility that the fees may increase. Condo fees are only guaranteed for the first year of operation – when the builder must pay for any overruns – so the fee quoted today may not be the one you will actually pay tomorrow.
How is the condo corporation managed? Some properties may be self-managed or looked after by either a small or large property-management company. Is the company reputable?
Inquire about the Board of Directors. Does it show a history of responsible financial stewardship? Boards must operate within legislative requirements and pay attention to the requirements of the 2001 Condominium Act.
Ask for a copy of Form 15. This is a summary of the Reserve Fund Study that outlines major repairs required in the future. Legislation requires each new condo to complete this study at the end of the first year and update it every three years. The reserve fund must also be built up each year and, should you sell your condo, your contributions are not refunded.
Obtain a copy of the Status Certificate. This contains several documents indicating financial and management stability, including the most recent audited financial statements, a record of assessments and legal actions, any liens against the unit you are interested in purchasing, and a list of Board members.
How are utilities billed? Condos are going green and, if energy costs are billed on a per-unit basis, then you have more control over your energy use and monthly cost.
Are any units rented? Buildings or complexes with a higher proportion of owners in residence may result in more stability and less vandalism.
The Institute of Chartered Accountants of Ontario is the qualifying and regulatory body of Ontario’s 33,000 Chartered Accountants and 5,000 CA students. Since 1879, the Institute has protected the public interest through the CA profession’s high standards of qualification and the enforcement of its rules of professional conduct. The Institute works in partnership with the other provincial Institutes of Chartered Accountants and the Canadian Institute of Chartered Accountants to provide national standards and programs that are used as examples around the world. </em>
