The BC Home Hunter Group Guide To Understanding Condo Fees

We have previously posted the A-Z's of condo fees and potential issues, due to popular demand we are posting a new and revised version for 2015.

Condominium ownership differs from lowrise homes in many ways, especially where fees are concerned. Those entering into condo ownership for the first time will do well to understand exactly what these costs are, and what they cover.

One of the most misunderstood expenses is the interim occupancy fee. When your lowrise home closes and you move in, you officially own it. With a condominium, depending on when in the sales/construction process you purchase, you will most likely enjoy occupancy long before you receive the title to your suite.

Unless you move in after the condo is registered, you do not own your suite outright. You enter into what is referred to as “interim occupancy.” This is the gap between the occupancy date given to you once roof-topping has occurred, and when the condominium is registered and you receive title. Until that time, the suite is still owned by the vendor.

A “condominium” is not formed until it is completed and passes the approval processes that enable it to be registered with the Land Registry Office. In highrise condos, the lower floors are finished long before the upper levels, but the approvals process begins once the first suite is occupied. It typically takes up to six months, although sometimes it can be quicker. During this time, you will pay an occupancy fee to the developer.

This fee encompasses three elements. First, it is determined by the interest portion of the balance owing on the purchase price (usually payable on the registration date) based on a one-year mortgage rate of the Bank of Canada. Second, it includes the estimated maintenance fees for the suite, and third, its portion of the estimated real estate taxes. There are also other fees such as the enrollment of your suite with Home Warranty.

You may think of this as rent, but it is not considered rent, and it is not money that can be applied toward your mortgage. Once the title is transferred, you take out your mortgage and the builder/developer receives the money. The benefit to the suite owners is that you get to move in more quickly and not have to wait until registration. You have a substantial amount of notice before your occupancy date.

Remember that during interim occupancy, you must have your homeowner’s insurance in place, and you have to arrange for utility hook-ups as if you own the home. Your appliance warranties kick in upon occupancy because you are actually using them.

Keep in mind that your maintenance fee dollars provide a lot of value. For one thing, they enable exterior and interior elements to be kept looking beautiful and in good repair. To be fair, consider what you would have to spend to receive the same service in a lowrise home. Many condominiums today offer 24/7 concierge service, and these professionals have to be paid. Those who choose to add a security system to their lowrise home pay a monthly fee for monitoring. In a lowrise home, chores such as mowing the lawn, weeding the garden and washing the outside windows have to be done by someone, and hiring professionals is an expense.

In addition, the ongoing cleaning and maintenance of things like condominium elevators, the lobby and hallways are covered by your fees. A portion also goes toward the “reserve fund,” which is administered by the condominium board. This fund ensures that essential services can be paid for in the future, should unexpected problems arise after your warranty coverage is over.

In some condominiums, a percentage of maintenance fees covers utilities. Nowadays, many condos provide individual hydro and water metering per suite, which means that buyers pay only for what they use. The important thing is to ask questions about the fees that are expected of you and what they cover, and then make your condo purchase decision accordingly. An educated shopper makes a happier owner.

If you have any questions, concerns or are considering the purchase or sale of any home including strata please don't hesitate to call or email your urban and suburban real estate team at THE BC HOME HUNTER GROUP, 604-767-6736.