condos

What is a Condominium?

A “condominium” typically refers to a form of legal ownership, as opposed to a style of construction. Condominiums are most often thought of as high-rise residential buildings, but this form of ownership can also apply to townhouse complexes, individual houses and low-rise residential buildings.

Condominiums consist of two parts. The first part is a collection of private dwellings called “units”. Each unit is owned by and registered in the name of the purchaser of the unit. The second part consists of the common elements of the building that may include lobbies, hallways, elevators, recreational facilities, walkways, gardens, etc. Common elements and mechanical and electrical services. The ownership of these common elements is shared amongst the individual unit owners, as is the cost for the operation, maintenance and ongoing replacement.

What types of Condominiums are there?

Residential condominiums can be in:

1. High-rise or low-rise (under four story’s)
2. Townhouses or row houses
3. Duplexes (one unit over another)
4. Triplexes (stack of three units)
5. Single detached houses
6. Stacked townhouses or freehold plots

Every condominium is governed by its own unique rules, regulations and by-laws. These may be very strict or very relaxed depending on the nature of the condominium corporation. These are necessary to ensure that condominiums are properly operated and maintained and to define the rights and obligations of the individual owners. With respect to rules regarding the individual owners, condominiums may have restrictions regarding the number of occupants per unit, pets, noise, parking and when certain amenities may be used.

Many condominiums have strict rules concerning the alteration of the unit space or its appearance. For example, the condominium corporation may require all the exterior doors of the units to be the same colour to keep the architectural and community aspect of the condominium intact. Additionally, you may have to get the permission from the condominium Board of Directors before you change exterior fixtures or install a satellite dish, especially as some changes may affect the condominium structure or safety.

New vs. Resale

The term “New” is applied to condominium buildings that are either under construction or have been newly completed, while “Re-sale” condominiums are units that have already been occupied, typically in older buildings, and are offered for sale by the current owner.

You can purchase a new condominium from the developer either before or during its construction and well before the condominium corporation is formed. A developer may have some unsold units available after the condominium has been completed and registered. In some market conditions, a developer may wait to sell a majority (or all) of the units before registering the condominium or starting construction. Deposits are typically required to secure, or reserve, a condominium unit in a new development.

Important issues to consider in the purchase of a new condominium are related to construction and quality. Be aware of the future location of heating and air-conditioning equipment, ventilators and hot water heaters as this can affect the availability and aesthetics of the space in your unit. Some key questions to consider include: Are there any special provisions to limit noise between units? How are the units heated, cooled and ventilated? How are odours controlled? Is the building energy-efficient? Who operates and maintains the heating and air conditioning systems? What options are available for suite wall and floor finishes, cabinets and fixtures?

You should also be aware that the view form your unit might be subject to change if the building is being constructed in a newly developed area or as a part of a larger complex. Be sure to ask about the future construction plans for adjacent open areas as your view may change significantly with the construction of a neighbouring high-rise.

Advantages of buying a new condominium may include:

1. A lower purchase price
2. More choice of locations within the building
3. A broader range of options and/or upgrades
4. Newer buildings have less risk of having to undergo costly, noisy and intrusive repairs and renovations
5. New home warranty protection

Disadvantages of buying a new condominium may include:

1. Because construction may not have started, you cannot “see” what you are buying and must rely on artist sketches and floor plans (which may change).
2. Your initial deposit will be tied up for the duration of construction.
3. Financial institutions may not give you a mortgage on an unregistered condominium.
4. Construction of your unit may not be completed by the expected date.
5. You may move into your unit while construction continues in others- this can be noisy and disruptive.

Resale condominiums

One of the advantages of purchasing an existing condominium is that you get to see the unit, building and grounds before you make your purchase. You also have the opportunity to meet other unit owners, speak with the Board of Directors and ask questions to the property manager. Consider the age of the building and what repairs have been made and when. Ensure that the condominium is well maintained and managed. All of this will provide you with valuable information as to whether or not the condominium is right for you.

Advantages of buying a re-sale condominium may include:

1. You get what you see.
2. There are no lengthy waiting periods before you can move in unless provided for in the condition of sale.
3. Deposits are often much lower for re-sale purchases and there is no GST.
4. You can check out the condominium “community” in advance to see if the corporation is well run and the people who live in it are compatible with your needs and lifestyle.
5. Older condominiums can have larger unit sizes.

Disadvantages of buying a re-sale condominium may include:

1. Fewer options with regard to choice of unit within the building, decorating or upgrades.
2. Older re-sale condominiums may require more maintenance and repair than new ones.
3. The amenities that you may find desirable may not be available.
4. Older re-sale units may not be as energy efficient due to different construction standards in newer buildings.
5. Major repairs may be coming due that will require extra charges to the unit owners if the reserve fund is under funded.
6. You will only receive the portion of the new home warranty that has not yet expired.

Real estate agents

A good real estate agent specializing in existing condominiums can help you save time and energy.

You can choose to deal with the vendor’s real estate representative, or enlist with an agent who will act only on your behalf. You should not be charged a fee for their services, as they normally share in the vendor’s agent’s commission. Make sure you are clear on who is paying the real estate agent’s commission, and what your obligations are once you’ve signed an agreement. It is a good idea to enlist with a real estate agent whether buying a “New” or “Re-sale” condominium as they will give you valuable information needed to decide on your purchase.

All content in these pages have been adapted from the Canadian Housing and Mortgage Corporation “condominium buyers guide”. To view the full guide visit www.cmhc.ca.