Condo Fees: What they cover and what they don't

If you're thinking about purchasing a condo unit in a condo building in the near future, it's likely that you heard of the term condo fees, or condominium fees. Unlike living in a single family property, condo ownership comes with additional monthly condo fees on top of your mortgage payments, if you have one.

So, what exactly do monthly condo fees cover? Stick around to find out what it is you need to know before moving in.

What do condo fees cover?

Building maintenance is one of the major costs your condo fees cover. In simple terms, this portion of your expenses enables your condominium to function from day to day. Here's a closer look at what maintenance fees tend to cover:

1. Utility expenses

Yes, your condo's fees will cover the cost of utilities. But there's a catch. It will only cover utilities for any common areas shared by all residents living in your particular complex, such as electricity, water, heating, and cooling, given that they are shared expenses. They won't, however, cover the cost of utilities in your individual unit.

2. Condo reserve funds

A reserve fund, or contingency fund, is money that is set aside for any major repairs and replacements needed outside of everyday expenses. Money for the reserve fund is typically mandatory for all residents living in the building and will typically fund some of the following expenses:

Repairs and replacements of condo building structures

The reserve fund will mostly cover any expenses related to major repairs and replacements throughout the building. This will include things like the roof, exterior walls, windows, and mechanical systems like elevators, among others.

Improvements to the building

The reserve fund will also cover expenses related to upgrading the overall building as a means of increasing overall property values—for example, installing new heating and cooling systems into units and other enhancements.

Emergency repairs to the building

Lastly, these condo fees cover unexpected expenses caused by unforeseen circumstances, such as severe weather events or damages to the building.

3. Shared spaces

One of the nice things about living in a condo is that it typically includes amenities that all residents get to access. This includes things like sports courts, meeting rooms, swimming pool, outdoor patios and BBQs, and more. Just keep in mind that the more amenities offered by your condo, the more fees you'll likely pay each month.

These fees cover the cost of keeping these common areas maintained and operating throughout the year.

Do monthly condo fees include utilities in Ontario?

Yes, in Ontario, your condo fees will cover most of your utilities. This typically includes water and HVAC. However, you may be responsible for paying your monthly electric bill. It really depends on the building you live in. For example, some condominium developments will pay for their residents' internet and cable bills as an incentive to purchase a unit in the building, while others will not.

This is why it's important that you understand what is and isn't included before putting an offer on a unit, that way you can go ahead with your financial planning and ensure that you'll be able to afford your maintenance fees upon moving in.

What are most condo fees?

How much your condo fees are per month depends on a couple of factors, including where your condo is located, the type of amenities offered, and the province in which you live. With that being said, you can expect to pay anywhere between $300 to $1000 on average for these fees.

It's important to keep in mind that in newer buildings with more amenities, you'll likely be charged higher fees as the overall maintenance costs will be higher, especially if you have an indoor gym and swimming pools.

Ultimately, when looking for a condo in your area, make sure to ask what associated condo fees you'll be expected to pay each month to determine whether living within the building is within your financial limits.

What are the pros and cons of condo fees?

Living in a condo and having to pay fees comes with its own set of advantages and disadvantages, including the following:

Advantages

Some of the advantages to having to pay condo fees are:

Convenience

Condo maintenance fees and any repairs of common areas are taken care of by your management company, saving you from having to do them yourself, which is convenient if you are a regular visitor to your shared gym and other spaces.

Consistent quality

Condo fees also help ensure that property is consistently maintained to ensure that the building remains operational, clean, and aesthetic all year round.

Access to amenities

Access to numerous amenities can reduce the costs of owning your own and having memberships to gyms, pools, and other activities outside of your building.

Reduces the likelihood of unexpected expenses

Having a reserve fund ensures there is money available for any required repairs and replacements, giving you peace of mind that you won't be stuck with unexpected bills.

Cost-effective utilities

Shared costs can be more affordable than individual expenses, especially for utilities.

Disadvantages

The disadvantages to condo fees are:

Overall expenses

Monthly don fees can be significant depending on what building you choose to live in, adding to your overall cost of owning a condo in the first place.

Fees can increase

Fees can increase over time due to rising maintenance costs or the need for major repairs to the building, which some potential buyers and owners may not be prepared for.

Lack of control

Owners living in the building typically have limited control over how the money is used, as the allocation of funds is generally controlled by the condominium corporation and management companies who are in charge of making substantial decisions that affect all residents.

Management issues

If you live in a building with poor management, it can lead to the misuse of funds or inadequate maintenance throughout the building. Not only does this negatively impact the quality of your building, but it can also cause frustrations among owners and residents.

Paying for things you don't use

All owners in a building need to pay monthly condo fees, regardless of whether they use the amenities and offered services or not.

Are condo fees mandatory in Ontario?

Yes, condo fees are mandatory in Ontario and other provinces, given that you are sharing the space with other residents. Without condo fees, the management of your building, including daily operations, would not be possible.

Therefore, if you are considering purchasing a condo in the future, you'll need to evaluate whether or not paying for shared amenities and maintenance is something you wish to do.

What is an operating fund?

A condo operating fund can sometimes be confused with reserve funds when in reality, they are different. Essentially, an operating fund is used to pay for costs that are associated with the day-to-day operations that occur within your condominium. This includes costs like:

Utilities for common areas

Payments for utilities like heating, cooling, gas, water, and electricity in shared areas of the property.

Maintenance and repairs

General servicing, little repairs, and frequent upkeep that is needed for the communal spaces in your condo like lawns, lobby areas, and hallways.

Cleaning services

Daily cleaning services that are needed to keep all shared spaces clean and tidy on a daily basis.

Landscaping

If you have outdoor areas surrounding your condo, costs will also be associated with landscaping that is needed to keep these outdoor spaces clean and aesthetic.

Security expenses

If you have any security systems and personnel on the property throughout the day and night, these funds will also cover any associated operational costs.

Management fees

Payments are made to employees or property management agencies to manage the condominium's services on a daily basis.

Insurance for the building

Insurance policies cover the cost of repairs for damage that is caused by things like fires, vandalism, and other risks that are stated within the policy guidelines that your condominium management company has purchased.

Administrative costs

This likely includes things like office expenses, legal fees that may be required, accounting services for employee salaries, and other daily administrative fees.

How are condo unit fees calculated?

Condo fees can be calculated in different ways. Here is a general guideline to help you better understand these calculations:

Annual cost

Your condo association will create a budget for all expenses, like maintenance, repairs, utilities, insurance, and management fees that need to be paid each year.

The size of your unit

Depending on the size of your condo unit, you'll likely be assigned a percentage of what you will need to pay on a monthly basis to cover the cost of these annual expenses. For example, you could be assigned 1% of the fees for a smaller unit, while those living in the penthouse or larger apartments may be assigned 3%.

Ultimately, how these fees are distributed will be outlined in the purchasing documents that your realtor will give you before you buy your new condo. It's important that you understand these costs so you can guarantee that you are able to pay for any associated expenses you are responsible for upon moving into the building.

What is not covered by your condo fees?

As you can see, a condo fee will cover numerous expected and unexpected costs. That being said, there are some things that are excluded from these fees that we think you should be aware of:

Property taxes

A condo fee does not extend to yearly taxes for owning a condo. However, this may change, depending on the municipality your condo is located in.

Your individual apartment and belongings

While insurance will cover shared areas throughout the building, your condo fee does not cover the cost of loss or damage to your individual unit or personal belongings. This is why it's important that you consider purchasing your own insurance policies.

Purchase condo owners insurance with BrokerLink today!

Living in a condo building comes with several different insurance risks, regardless of whether you own or rent your condo unit.

To ensure you're protected from potential hazards and liabilities, reach out to the insurance brokers from BrokerLink for comprehensive, customized insurance policies tailored to your needs.

You can contact us over the phone to speak with one of our brokers directly or get competitive insurance quotes from the comfort of your own home by filling out our online quote tool.

Get a condo insurance quote [phone]