Q: We just purchased a new condo eight months ago and I hear our condo fees may increase significantly once the developer’s budget ends this year. Why would we need any significant increase when everything is so new and doesn’t need significant repairs or anything?
A: The condo fees you are referring to are calculated from a master budget, prepared three or more years before construction of your building began. Many of those expenses could change significantly over a year or two, especially utility rates. Hydro, water and gas are anywhere from one-third to one-half of the total condominium budget. Many common elements such as elevators may have a one-year warranty and no monthly maintenance contracts are required in the first year. However, the second year is a different story. Now that yearly warranties are over, maintenance contracts are vital.
Other contracts include security guards, cleaning staff, superintendent, concierge attendants, etc. These are employees of the condo corporation and their salaries can vary depending on the hours and details of the work.
The price of monthly condo fees will also vary depending on the type of amenities. Properties without indoor pools, gym, sauna and recreation facilities will naturally have lower condo fees because of less maintenance.
Prior to purchasing a condo, buyers may want to ask the builder what items may appear in the second year budget that are not indicated in the first-year budget. There are many unpredictable factors that can affect your monthly condo fee from the second year on. Builders only guarantee their quoted condo fee for the first-year budget.
My advice to buyers is to find a condominium lawyer who knows the industry well. He or she will guide you through the process of investigating current and future condo fees depending on the type of condo you have your eye on.
Source: National Post