Fredericton Condominium Fees

Dear Rebecca
I have recently come to realize that my home is too much for me to manage and I have been thinking about downsizing to a condominium. I am concerned about fees. What kinds of fees must paid and what do these fees cover? Who sets the fee? When I purchase a condominium are these fees negotiable?
Margaret

Dear Margaret
Many people are under the impression a condominium is a style of building – it is not. To clarify, a condominium does not have to be a multi level building; it could be a multiunit, a detached unit, or bare land. A condominium is a form of legal ownership comprised of a unit, which you own, and the area of the property set out as common elements of which you become a ‘tenant in common” with all the other unit owners of the condominium corporation. Condominium fees are established to cover the expenses of maintaining the common elements and are expressed as a percentage specified in a document, registered with the province of New Brunswick, known as the declaration. How this percentage is established varies. In Fredericton, most condominiums calculate this percentage based on a per unit calculation however it could be on a square footage basis. As an example of the per unit calculation-if the building has 20 units you will be responsible for 1/20 of the common expenses or 5%. This percentage, established within a registered document, is not negotiable. The unit boundaries are established in the declaration. The common elements are all the remaining property except the units and generally the systems that serve the units. Common elements are both things you can see such as hallways, driveways, perhaps balconies swimming pools as well as components you cannot see such as pipes and wiring. When purchasing a condominium unit ask to view a copy of the declaration, rules and regulations and by-laws pertaining to the property. From these documents, you can establish what the common elements entail.
Just like the maintenance expenses in your own home, condominium fees are the maintenance expenses for the common elements. These fees, usually paid on a monthly basis, pay for the current and future operating expenses of the common elements of the condominium property. Like all home maintenance expenses, condominium fees will increase with the age of the property and cost of living. One point to consider is extras in the common areas, which may be expensive to maintain. Elevators, parking lots, fitness areas, tennis courts and swimming pools will ultimately add to the expenses. Even if you do not use these amenities, you will still have to pay to maintain them.
Other fees paid when purchasing a condominium may be a contingency fee and reserve fund contribution. Although an expense, it is good thing to have a healthy reserve fund for major repairs. Some condominiums have very low reserve funds and this should be taken into consideration when purchasing. If there is a low reserve fund, combined with an aging condominium common elements then you could be hit with a large bill. A well-managed new condominium will be either working towards having a good reserve fund and an older well-managed condominium will have one established. You can request this kind of information when purchasing a condominium.
In May of 2009, a new Condominium Property Act passed in New Brunswick, which will come into force on January 1, 2010. Compared to the old act, established in 1969, this new act provides better consumer protection. In this new act, all condominium corporations will be required to have a reserve-fund account to offset expenditures for significant maintenance and repairs. Those with 10 or more units will be required to carry out a reserve fund study to establish 10-year projection of major expenses. If this study shows to have a shortfall then owners of units will have to contribute to the fund in proportion to the percentage established in the declaration.
For a great source of information on purchasing a Condominium, ask your Realtor® for the CMHC publication Condominium Buyers guide or go to CMHC website to download an online version.
Happy House hunting