Is Condo Living For You?

What is a condo?  Many people hearing the word “condominium” think of an owned unit in a high-rise apartment building.  But a condo can be any type of dwelling:  an apartment in a low-rise building, a townhouse, freestanding house, duplex and so on.  What makes a condo different from a “freehold” house is that you own your unit only to the walls, and you share ownership of the land, rest of the building and common areas.  This sharing of ownership is also a sharing of costs with other members of your condo association.  Decisions about the property are made by a board of directors or a property management company.
 

How do you decide if owning and living in a condo is for you?  Living in any kind of dwelling comes with trade-offs and compromises!  Consider these advantages and disadvantages of condo living over owning a freehold home: 

Pros:

Kiss your snow shovel and lawn mower goodbye!:  Monthly condo fees cover the cost of outside maintenance, such as snow shoveling, lawn mowing, eavestrough cleaning, possibly even exterior window washing. 

Cost sharing:  Some of your condo fees go into a reserve fund to be used for major repairs such as re-shingling the roof or replacing windows.  If more money is needed, special assessments pool funds from all condo owners so the cost per owner is usually much less than for a freehold home.

Lifestyle:  Condos are ideal for people who prefer to live on one level or in a small home, who enjoy socializing with their neighbours, who like living in prime urban locations, who appreciate the convenience of being able to leave home for days or even months at a time without having to worry about yard maintenance, security and the like.  Many condo developments also become communities of like-minded people, such as young professionals or seniors, resulting in increased opportunities for recreation, socializing and support.

Expression of personal taste:  Freedom to decorate the interior of your unit as you wish.

Amenities:  Does your 1200 square foot bungalow have a swimming pool, exercise room, theater room, party room and guest suite?  Didn’t think so!

Price:  Condos are generally cheaper to buy than a freehold home.  Lower property taxes too!

Location:  Condos are often located “where the action is” – in the heart of a major city and close to facilities and services such as restaurants, medical facilities, artistic and recreational activities, public transportation and so on.

Security:  With close neighbours all around, plus secure entrances and even doormen in some complexes, you may feel safer than in a self-contained house.  If your neighbours are owner occupants, they may be more likely to take care of their property, and to watch out for yours. 

Cons:

Price:  Condos may be cheaper to buy than freehold homes, and you may be able to get more house for the money BUT, not necessarily!  Research and do your homework!

Investment value:  The value of condos tends not to rise as much or as quickly over time as the value of freehold homes, and improvements made to a condo may not give the same return on investment as in a regular home.

Condo fees:   A mortgage may eventually be paid off, but you’ll be paying monthly condo fees, which can be substantial and can always be expected to increase, for as long as you live in your condo.  This is more onerous if you don’t use amenities like a swimming pool or party room that your fees are subsidizing.

Special assessments, or “everybody pays”:   If the condo board needs money to pay for almost anything beyond what’s been budgeted, things like unforeseen utility bill increases or emergency repairs, all condo owners will be on the hook for a share of the pain, with no choice but to pay. This includes paying for damages caused by other condo owners or their guests, or legal fees if the condo association is involved in a lawsuit.

Management:  Condo developments are usually managed by volunteer boards whose members may or may not have the experience and expertise to make informed decisions, or by property management companies whose first priority may be money rather than the welfare of residents.  Poor management could result in neglected maintenance, arbitrary special assessments and more, leading to costly situations for residents which might include a decrease in the resale value of their condos. 

Rules and bylaws:  Most condo associations have many, and the wise prospective buyer will study them thoroughly before committing to the purchase.  For example, a condo development may decree that in-suite washing machines cannot be used before 8 AM or after 10 PM.  Rules relating to parking, noise, pets, garbage disposal, outdoor barbecues, even overnight guests are common.  Something you may want to ask about:  Are amenities, such as a preferred parking stall, transferable?

Community living:  Sharing walls, ceilings and floors with other residents, especially if sound-proofing is less than optimal and neighbours are noisy, can be stressful.  Condo living also means less privacy and possibly less safety when it comes to things like fires and the like.

Parking:  Often limited and probably not adjacent to one’s unit.

Lack of green space or limited outdoor living space:  Condos in downtown locations in particular are unlikely to be surrounded by lawns and gardens.  Patios and balconies, if they exist at all, are typically small.

Limited storage space. 

Lack of control:  Within your own unit, you can usually repaint the walls, change the cupboards, flooring or appliances, but beyond your walls, you may not have a choice in things like lobby décor, landscaping, window replacement and the like.  Worse, the timetable and budget for such things will not depend on your convenience or approval.

Property insurance:  Condo owners may require special insurance to protect not just their personal investment but also their share of the common property in the condo development.  Ask your insurance agent about “loss assessment”.  Also, take the time to read carefully what’s included and covered in the condo corporation policy; that way, you’ll know what you need to include in your personal policy.

Do the benefits of condo living outweigh the drawbacks?  Here’s some more advice if you are thinking of buying a condo: 

Talk to the residents:  Meet the people who will be your neighbours.  Ask them what they feel is good and bad about the condo development and its management.

Consult the experts:  Look for a realtor and lawyer who have experience in dealing with the condo market.

Read provincial condo legislation:  Take a look at the Province of Alberta Condominium Property Act. 

Inform yourself about types of ownership:  Visit HomeBuyer.ca for a look at the different types of condo ownership.  See also Buying a Condo from the Canadian Bar Association.

Compare condo fees:  Find out what the fees cover.  You may find that the condo development with the lowest fees is not necessarily the best choice; higher fees, for example, might be covering things like utilities, cable and internet. 

Study the condo bylaws, rules and regulations:  You’ll want to know what you can and cannot do – and what your neighbours are allowed to do as well.  Can you have pets?  run a business from your unit?  and so on.  Take note also of penalties imposed for breaking the rules.

Find out about the occupancy rules:  Will your neighbours all be owners, or will they mostly be renters?  Will you be allowed to rent out your place?

Ask pointed questions about the condo development and its management:  Is the development well managed?  What is the current financial situation of the development?  What financial reserves are maintained?  What special assessments have been done?  What work is planned for the future?  If you reach the point of having a home inspection done, pay the extra to have your inspector look beyond the walls of the unit you’re considering for purchase.

Buy the right property insurance:  Remember that you may need to protect your share of common property should an accident cause damage beyond your own unit.

Plan to get involved with the condo development board of directors:  This is the best way to be informed and have a say about what happens in the condo community.

For an excellent and thorough exploration of everything relating to condos in Canada, download the Condominium Buyers’ Guide from CMHC.  Of particular use to a prospective condo owner are the checklists for evaluating the physical condition of the condo, as well as detailed lists of questions to ask before you sign a purchase contract.