Ottawa Condominium Corporations Buying Condominiums

Ottawa’s Condominium Corporations

What is a condominium corporation?

A condominium is a form of legal ownership. Condominiums can be established in garden homes, high-rise residential buildings, low-rise residential buildings, and townhouses. Condominiums are separated into two different parts. The first part of a condominium corporation is composed of complex of private dwellings also known as condominium units. These units are owned by separate legal entities and are registered in the name of the purchaser(s) or legal Ontario incorporated company(ies). The second part of a condominium corporation consists of the common elements of the building that may include hallways, walkways, gardens, lobbies, elevators, and recreational facilities. Common elements may also include structural elements and mechanical and electrical services. The co-ownership of these common elements is shared amongst the individual unit owners. Each unit owner has an undivided interest in the common elements of the building. This ownership interest is often referred to as a unit factor. The unit factor for any particular unit is usually calculated in proportion to the value that the unit has in relation to the total value of all of the units in the condominium corporation. The unit factor is also known as your ownership percentage in the common elements. This unit factor is used in calculating the monthly fees that you will be paying for the operation of the condominium corporation. The creation of a condominium is regulated by provincial or territorial condominium legislation and municipal guidelines. A developer or other interested party may register a declaration to create a condominium or in other cases, where the provincial legislation differ, an application is made to have title issued for the units pursuant to an “approved plan of condominium”. Once a condominium corporation has been established, a Board of Directors, elected by, and generally made up of, the individual condominium owners, take responsibility for the management of the corporation’s business affairs. Each unit owner has voting rights at meetings. Every condominium is governed by its own unique rules, regulations and by-laws. The rules are necessary to ensure that condominiums are properly operated and maintained as well as to define your rights and obligations and those of other condominium co-owners. Many condominiums have strict rules concerning the alteration of the unit space or its appearance. Condominiums are made up of complete communities with varying lifestyles.

When you buy a condominium, you become the condominium corporation co-owner where you own your unit, as well as a percentage of the common property elements allocated to the unit. You own everything within the unit boundary, any equipment, systems, finishes that are contained within it. Usually, the cost of parking lot and storage facilities is in addition to the initial purchase price. Review your agreement of purchase and sale to make sure you have a parking spot included in your condominium purchase. You can access Condominium Resale Agreement of Purchase and Sale here provided for viewing purposes only.

As a condominium co-owner will I have to take care of all common areas?

Most condominium corporations contract-out the daily operations of the condominium to a property management company under the direction of the condominium’s Board of Directors. The cleaning of common areas, payment of common area utility bills, operation and maintenance of the central space, hot water heating and air-conditioning systems, snow and garbage removal and the collection of monthly maintenance fees may fall under the jurisdiction of the property manager. Any additional expenses which were not accounted for in the annual budget of the condominium corporation may have to be approved by the Board of Directors before the property management company receives the funds to contract-out additional work orders.

The property management company will look for suppliers of services for the maintenance of the following:

• Snow removal and grass cutting, watering as well as landscaping
• Common plumbing, electrical and heating and air-conditioning systems
• Repairing or replacing balconies
• Windows and doors – repairs and replacement
• Roof and wall repairs
• Parking areas cleaning
• Repairs such as painting of various common elements
• Maintenance of recreational amenities such as children’s playground, garden
areas, pool areas, exercise and gym areas, sauna etc.
• Any other part of the property not described above that is referred to as
common elements.
• HVAC system maintenance

Please contact Tom Witek at 613-314-1199 or Tom Witek’s Condo Buying System

What insurance will I need when buying a condominium?

Both the unit owner and the condominium corporation must have insurance. The corporation may be responsible for:

• Common areas and units
• Boilers and equipment such as elevators and HVAC systems.
• The corporation’s property, such as furniture, equipment, vehicles.
• Directors and Officers insurance- to respond to claims made personally against a
director or officer of the condominium.
• Personal liability – against claims for bodily injury and/or property damage
occurring on the condominium property or caused by some act or omission of the
condominium corporation.
• All perils as per the condominium governing documents.

Investing in condominium rental units

Many condominium buyers purchase their units as an investment with the intention of renting the unit(s) out. While most condominium corporations allow owners to rent their units to a third party, you should confirm this through a review of the condominium’s governing documents and your provincial legislation.

New condominiums versus resale condominiums

Special considerations when buying a condominium:

• Understanding of floor area measurements,
• Beware of any plans to reduce the ceiling height in any location in the unit.This
is usually done to accommodate duct work and other mechanical and electrical
• Beware of the location of heating and air-conditioning equipment.
• Beware of the location of ventilators and hot water heaters.

Other considerations when buying a condominium may include:

• Who operates and maintains the heating and air conditioning systems?
• What options are available for floor finishes (hardwood, carpet, tile, laminate
etc.) cabinets and fixtures?
• Are there any special provisions/materials for noise reduction between units?
• How are units heated, cooled and ventilated?
• Is the building energy efficient?
• What is included in the purchase price of the condominium and what must be paid

These are the advantages to buying a new condominium corporation’s unit:

• Usually, a lower purchase price when compared to a freehold home.
• A broad range of options and/or upgrades available to choose from.
• Newer buildings have less risk of having to undergo costly repairs.
• You can choose your preference in location within the building.
• New home warranty protection.

These are the disadvantages to buying a new condominium corporation’s unit:

• Because the construction may not have yet started, you must rely on artist
sketches and floor plans (which may change in the long-run). Understand the
location of your unit’s boundaries, location, finishes, materials, chattels etc.
These should be clearly specified in the agreement of purchase and sale.

• Your initial deposit will be tied up for the duration of the construction.

• Financial institutions may not give you a mortgage on an unregistered

• Your interest rate may change because financial institutions, in most cases, can
guarantee your pre-approval mortgage interest rate for 120 days only.

• Construction of your unit may not be completed by the expected closing date.

• You may move into your unit while construction continues in others – this can be
noisy and disruptive. You may actually have to rent your unit from the
condominium corporation, if your unit is not registered in time under your name.
This would mean that you live in the unit and pay rent to the corporation while
waiting for the title to your property.

These are the advantages to buying a resale condominium corporation’s unit:

• You buy what you see.
• You can take possession of the condominium unit quickly and without delays.
• Deposits are often much lower for resale purchases and there is no GST paid on
the purchase price.
• You can inspect the community within which the unit is located prior to making
an offer. Is the community for singles, younger couples, younger couples with
children, or older couples?

These are the disadvantages to buying a resale condominium corporation’s unit:

• Older condominiums may have higher condominium fees due to repair and
replacement need, depending on the level of reserve fund.
• Fewer options with regard to choice of unit (within the building), decorating,
or upgrades.
• The amenities that you may find desirable may not be available.
• Older resale units may not be as energy efficient due to different construction
standards and the updates in the building code.
• Major repairs may be coming due that will require extra charges to the unit.
These are called special assessments and are discussed below.

Affordability – Purchase Price and Recurring Costs

For new construction condominiums the purchase price may include:

• Unit sale price.
• Upgrades.
• Occupancy fees which may include: estimated common expenses based on the
disclosure statement budget, estimated realty taxes on the unit, interest on the
balance is due on closing.
• PST on chattels being purchased with the unit.
• Development charges.
• GST on the sale price.
• Landscaping fees.
• Two months’ common expenses to build the reserve fund.
• Utility hook-up fees.
• Warranty program enrolment fees.

In addition, at final closing you will be required to pay the following costs:

• Remainder of the purchase price.
• PST and GST on extras or upgrades to unit finishes, equipment and systems if not
included in the purchase price.
• Legal fees and disbursements.
• Provincial land transfer tax.

Many of these additional costs do not apply to resale units, since they were already paid and/or factored into the purchase price.

Recurring Costs:

• Monthly condominium fees or common expenses.
• Unit and contents insurance.
• Mortgage payments.
• Mortgage insurance.
• Property taxes.
• Amenity fees, such as storage, pool, extra parking, if not included in the
common expenses.
• Utilities, telephone, cable and internet access.
• A contingency for emergency repairs.
• Maintenance costs associated with the upkeep of your unit.

What is included in my condominium fees?

Unit owners pay a monthly condominium fee to cover their portion of operating expenses of the common property elements. A portion of this fee is allocated to the reserve fund that is created to ensure that there are sufficient funds available for major repairs and replacements over the life of the building. Calculation of condominium fees varies by province but it is usually specified in the governing documents of the condominium corporation. Condominium fees are usually calculated from the annual operating cost of the entire condominium and divided by the percentage of your contribution to the common expenses (your unit factor) as outlined in the condominium governing documents and or local legislation. These fees may include:

• Day-to-day care and upkeep of the common property elements (eg. snow removal,
landscaping, cleaning of common elements including carpets and exterior windows,
heating/cooling systems maintenance).

• Contributions to the reserve fund, which is used to pay for major repairs to,
and replacement of, common building systems to ensure the condominium is kept in
good repair over the life of the building.

• Property management fees.

• Salaries of condominium employees (eg superintendent, security guards,

• Amenities (eg. use of pool, salary of lifeguards, recreational facilities, party

• Utilities.

• Building repair and maintenance.

• Cable and/or internet access.

• The corporation’s insurance policies.

If the Board overestimates the common expenses, the surplus is wholly applied either to future common expenses or is paid into the reserve fund. Refunds are not given to the unit owners.

Extraordinary Expenses known as Special Assessments

If your Condominium Corporation generates a deficit in the operating budget or reserve fund, you will need to pay extra contributions. When this occurs, each owner is given a special assessment charge. The amount of the additional mandatory contribution is calculated and multiplied by your unit factor as previously discussed.

You can pay the special assessment contributions in two ways:

1. The amount owned by the owner is added as a lump sum to one month of an
owner’s regular monthly condominium fees,

2. The amount owned is spread over a period of time by increasing a number of
monthly condominium fees.

This is why it is crucial to check and understand the financial statements of Condominium Corporation, reserve fund levels (surplus versus deficit), building condition surveys, inspection reports, maintenance history, and the estoppel or status certificate for the condominium corporation before you commit to signing an offer of purchase and sale.

Condominium Specific Terms

1.Board of Directors: Each condominium has a Board of Directors that is elected by, and generally made up of, the unit owners. The Board is responsible for administration and management of the condominium corporation, including policy and finances, as well as decisions about the maintenance and repair of the common property. Unit owners are usually entitled to one vote for each unit they own for each position on the Board of Directors.

2.Common Elements or Common property: Common elements of common property are the portions of the condominium that are not owned by a unit purchaser as part of his/her individual unit. They are shared and co-owned by all the individual owners of the condominium corporation. They usually include such things as corridors, elevators, recreational facilities, playgrounds, lobbies, the grounds, central heating, and air conditioning systems and parking. What is and is not included, as part of the common property elements, must be listed in the condominium’s governing documents. It is possible that some of the common elements may be reserved for the personal use of one or several owners. They are also known as restricted or exclusive use common elements.

3.Disclosure Statement: In some jurisdictions, the developer of a new condominium must provide you with a disclosure statement before the agreement of purchase and sale is binding. The statement includes, among other things, a summary of features/amenities, proposed commencement and completion dates for construction, the condominium’s governing documents and budget for the first year after registration.

4.Estoppel Certificate or Status Certificate: Most jurisdictions require condominiums to issue information packages to prospective buyers. This package can contain the declaration, by-laws, rules and regulations, insurance information, reserve fund balance, other financial disclosures, legal description of the unit and management contracts. It may also include information about any legal filings or judgements against the condominium corporation, the possibility of common expense increases, special assessments or insurance claims, all of which could affect condominium fees.

5.Governing Documents: These are the documents that describe how the condominium is organized and operated. They have different names in different provinces, but they can include declarations, by-laws and rules. They can contain provisions setting out the boundaries of the common elements, the by-laws/budget and common expenses. Governing documents vary from one condominium to another and are filed with the land registry office when the condominium corporation is created.

6.Property Manager: The property manager handles the day-to-day running of the condominium, such as hiring of staff, maintenance and repairs. The property manager is under contract to the condominium corporation. A representative from the property management company usually attends board meetings. Some condominiums may not have a property manager. These are sometimes referred to as self-managed condominiums. The Board of Directors, with the help of volunteers, will assume responsibility for the day-to-day management in those cases.

7.Reserve Fund: This is a fund set up by the condominium corporation is a special account to cover the costs of major repairs and replacement of the common property elements over time. Usually it is at least 10 per cent of the corporation’s total operating expenses. Reserve fund amounts and contributions are more accurately determined by a technical audit and reserve fund study undertaken by a qualified consultant. The consultant will assess the condition of the common elements of the building, estimating remaining life spans and the related repair and replacement costs. Based on their observations, the reserve fund study professionals estimate the monthly or annual contributions necessary to fund the long-term renewal of the common elements. After receiving the reserve fund study, the Board of Directors can propose a plan for the sustainability of the fund, including monthly contributions from owners as part of the condominium fees. You don’t want to move in your new home only to discover that the reserve fund is under funded and major repairs are required. This could mean a significant increase in condominium fees or the levying of charges, commonly known as special assessments, to the unit owners by the condominium corporation to pay for the needed repairs. Ensure you review either the disclosure statement or the estoppel/status certificate to determine the current state of the reserve fund.

Please contact me at Main Page Contact: Tom Witek 613-314-1199 or to schedule an appointment during a time most convenient to you.

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