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What is a condominium?

The term "condominium" applies to a specific type of property ownership rather than to any distinct style of building. A condominium can be an apartment, a townhouse, a semi-detached or even a fully detached complex in which a residential or other type of unit is owned by the individual owner and in which the rest (common elements), including land, is owned in common with the other owners.

Is this a new idea?

The condominium concept has been around for thousand of years but has only applied to North American dwellings since the early 1960's. The concept has evolved to the degree where today, there even exists condominiums for horse stalls and "dockominiums" - condominiums for boats.

How are condominiums created?

Condominiums are created by being registered with the Land Registry Office. In order to obtain registration, condominiums must first pass through 9 significant approval processes involving a number of local, regional and provincial bodies.

What is the registration process?
The process begins at the local city council, then progresses to the regional Planning Department, and then to the Ministry of Consumer and Commercial Affairs. Each of these official departments is concerned with ensuring that everything in your condominium is in keeping with the draft plan and is as represented to you in Condominium Declaration.

When does registration occur?
Registration occurs once the Ministry and local and regional municipalities are satisfied that everything contained in the Declaration and Description has been provided. Prior to registration, a thorough inspection of the entire project is completed.

How long does the registration process take?
The developer will guide the condominium project through the registration process as quickly as possible. Delays do not benefit the purchaser or the developer. Developers who are experienced at registering condominiums may be able to obtain registration in a very short period of time, often in under six months from the time the first home is occupied. Check with the developer to see when the company feels the project will be registered.

You may move into your new home before the condominium is registered. If so, you must pay the developer a monthly "occupancy fee", which is typically representative of what a mortgage payment would be. Transfer of title will take place at "final closing" which will occur shortly after the condominium becomes registered.

What priced home can you afford?

Personal factors greatly influence the price of home you can afford. Other debts, your general lifestyle and the amount you have available as a down payment are critical factors in determining an affordable house price.

To get a general idea of the mortgage you can afford, take your gross (before tax) annual family income and multiply this figure by 2.5. Under this rule of thumb, a family with an annual household income of $50,000 could consider a mortgage of up to $125,000. The sum of your down payment and mortgage is what you can afford to invest in your home.

How much of a down payment will you require?

For those who qualify, a down payment of just 5% from your own cash resources is the minimum required by lending institutions. Under a federal government sponsored program, first time buyers can now purchase a home with a 5% down payment, provided they meet certain criteria. If you have owned a home before, a 10% down payment is the minimum required. However, it is to your advantage to aim for a down payment of 25% or more. By putting down at least 25% of the purchase price, you will qualify for a conventional mortgage. This is the ordinary or standard type of mortgage and offers the best value.

In addition, the more money you have for a down payment the easier it will be to arrange a mortgage and to carry it comfortably. Obviously, the smaller the size of your loan, the lower your interest will be.

What are the costs involved in owning a condominium?

After final closing has taken place, you will have to make payments each month such as mortgage payments, common element fees and utility costs. In addition, property taxes will also have to be paid. Common element fees will cover the operating costs of the common elements and are subject to readjustment if expenses increase or decrease. Your unit will be charged a certain percentage of the project's total operating costs. This is established in the condominium declaration, and is typically correlated with the square footage of your unit relative to others in the building.

What should you look for in a sales representative?

Because the purchase of your condo is so important, you should deal with a sales representative with whom you are comfortable and has a good in depth knowledge of condominiums and the condominium market.

An independent sales representative who is assisting you in your new home search should have a general knowledge of the project and be able to help you find out more details.

Should you check out the builder?

The reputation of the developer and builder is of extreme importance. Has the developer built other condominium projects or is this the first? Visit past projects and speak to some of the owners if possible.

The Ontario New Home Warranty Program's Home Buyer's Guide to Ontario Builders may give you additional information too. It lists builders and tells you the number of homes they have built, how long they have been enrolled in the program and if they have an "Excellent" or other type of rating with buyers for after sales service.

Who runs the condominium?

Once the condominium is registered and more than 50% of the units have been sold, the affairs of the condominium corporation will be turned over to an owner-elected Board of Directors. The Board will carry out its responsibilities as designated in the Condominium Act, the Declaration, the Bylaws and the Rules and Regulations.

Because you are an owner, you have a vote and a voice in the running of the corporation. You may choose to run for an elected position on the Board or simply cast your vote for someone. Start by tenure as a condominium owner off right by attending all owners' meetings and staying informed. You will find the small amount of time it takes is time well spent.

What does the Board of Directors do?

In general, the Board of Directors manages the common elements of the condominium by setting the policy and procedures for running the Corporation. It directs the property management company in managing the day to day operations of the condominium Corporation.

What is professional property management?

As the management of a condominium project requires expertise in landscaping, finance, construction and administration, most condominiums employ the services of a professional property management firm. Professional managers have many systems and procedures for efficient operation of their support function. This would include computerized accounting procedures and management systems, experienced staff, access to suppliers who can provide bulk-buying discounts and good service, and careful selection of competent tradesmen. One of the key benefits of using a professional management company is that due to the periodic turnover of board members, such a company will provide the continuity of management to ensure a consistent level of quality in the condominium development. The responsibility of the board would be one of providing instructions to the management company and monitoring the company's performance.

What is a Status Certificate?

A Status Certificate is a short report on the current status of a condominium corporation. If you are buying a resale condominium, it is important that your agreement of purchase and sale is conditional, upon review of the Status Certificate by your lawyer.

The Status Certificate provides valuable information directly from the condominium corporation, examples of such information include, but are not limited to: Arrears or increases in common expenses; Whether any major work needs to be done to the building; The amount of the reserve fund and whether the reserve fund is sufficient for any major work. The Status Certificate also provides information about any claims against the corporation and whether the corporation is involved in any proceedings. This is important because if there are high value claims against the corporation and the corporation’s insurance does not provide coverage; the corporation can either increase the common expenses or levy a special assessment against the unit owners. If you are buying a condominium, you need to know of any potential significant increase in your monthly common expenses.

The Status Certificate package includes the corporation’s financial statements, declaration and by-laws. The financial statements are a good indication of a corporation’s financial stability. The statements will show the trends in expenditures and receipts for previous years and provide comparisons of a corporation’s actual and expected costs. The budget for the current year will also be included, identifying both the income to the corporation, and the amount of the reserve fund. The declaration of the corporation outlines the structure, rules and regulations of the corporation for example whether you can keep pets. The corporation’s by-laws govern the corporation’s functioning, i.e., electing the Board of Directors, meetings, notices etc.

What do common element fees cover?

The payments for the common elements are usually made to the Condominium Corporation and should cover the following items:

  1. Maintenance and Repair of Common Elements: This covers costs for building repairs, maintenance and landscaping, recreational facilities (if any) and service equipment. Each owner is responsible for the cost of normal maintenance and repairs inside his unit. If you are looking at a high rise condominium, you will either own your parking spot(s) or it will be a common element that is for your “exclusive use”. In either case, your common element fees will usually cover the maintenance on your parking spot(s) as well.
  2. A Reserve or Contingency Fund: Money out of this common fund will provide for the replacement or major repair of common elements that become obsolete or wear out (e.g. exterior painting, roof replacement, etc.).
  3. Management Costs:These are payments made to professional management firms or private individuals hired to administer all or part of the day-to-day functions of the condominium.
  4. Insurance: Find out what is covered by the policies of the condominium and arrange your own insurance accordingly. The condominium corporation normally carries public liability insurance and fire insurance for the common elements. Individual owners are responsible for ensuring personal belongings and any improvements made to the unit after the registration of the condominium.
  5. Will the fees increase? Experienced condominium developers are familiar with the costs associated with operating a condominium. They will set the fees at a level that will enable the Corporation to pay all reasonable operating costs and put some money into a reserve fund.

For budgeting purposes, count on the fees increasing at the rate of inflation.

How are common element fees set?

Monthly maintenance fees are initially set by the developer for a term of one year from the date of registration. From his experience in operating other properties, the developer outlines all the costs involved in the services being provided, the recreational amenities offered, the staffing requirements etc., and apportions the maintenance fees among the owners from the total operating costs.
After the first year, the monthly maintenance fee is established by estimating the operating costs for the projected year, based on historical costs, contracts in place and anticipated future costs. The Board of Directors approves the budget, which will be the basis of the maintenance fee for the coming year.

The maintenance fees will vary from condominium to condominium depending on the level of services and amenities offered. The key thing here is to know in advance what you will be paying for. Ask you sales representative to show you the operating budget. You will know then exactly what you are paying for.

How do you find out about the different condominiums available?

Step one in finding your Ottawa condominium is to engage the services of a professional real estate sales representative who knows the National Capital condominium market.  Arrange a meeting to discuss your needs, wants, affordability and preferred locations and your agent will get to work scouring the market on your behalf.

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