In today’s real estate environment, and particularly in the expansive Toronto Market, purchasing a condominium is more and more prevalent. With that, comes an entirely unique set of considerations.
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How Buying a Toronto Condo is Different than a House
Most people are raised with some understanding of what goes into home ownership, maintaining the roof and fixing a broken window. Even purchasing a home has understood considerations. I think most folks are familiar with the concept of a home inspection. When purchasing a condo, there’s a whole set of unique considerations – the “status certificate” is the equivalent of a home inspection, and you need to find out things like where the locker is, and who’s responsible for the maintenance of the HVAC unit.
How Condo Owners Share the Costs
Just as critically though, when you purchase into a condominium, you’re not just purchasing the unit itself but you’re also purchasing a proportional share of all the condominium common elements, you’re purchasing a responsibility to manage the hallways of the building and the paying of a concierge salary.
This evidently is too much for any one individual to manage, and too difficult for everyone to equally manage. As such, like how a company has a board of directors or a government who makes decisions on behalf of a larger group. This is known as a condo association, and it begs the further question, what is the purpose of a condo association, and how important are they actually.
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What is a Status Certificate?
When reviewing the status certificate, there’s lots to consider. How healthy is the financial situation of the condominium corporation? Are there any materials pending lawsuits? How many of the units are rented. All of this falls under the purview of the condo association. In essence, what you’re really reviewing is how competent has the condo corporation been, and how competent do they appear to be moving forward. Every individual and every lawyer who reviews the status will have a different definition of what level of stewardship is acceptable, but ultimately any purchase of a condo will require a choice to take on the decisions made in the past by the condo corporation, as well as a tolerance for what is the plan moving forward. Some people go as deep as reviewing the board minutes from every meeting of the association, while some people are satisfied merely reviewing the document known as the “status summary”, which outlines the most relevant and high-level considerations.
Not All Condo Boards Are Created Equally
Ultimately, every condo has a different quality of association and board. I’ve seen countless examples of mismanagement in a condo board, and it will result in bloated maintenance fees or prohibitive special assessments which can cost tens of thousands of dollars, and these will impact sale prices when the time comes to move on from an investment in real estate.
Are you thinking about buying a home soon? Whether it’s a condo or a house, here are some more articles to help you out:
- What Are the Elements of a Real Estate Purchase Agreement
- Do You Really Need a Buyer’s Agent?
- The Ultimate Guide to Buying Your First Home
Provided the review meets the standard of the buyer, or those who want to have a larger amount of oversight into the operations of the condo corporation, a buyer can become further involved by joining the board upon purchasing a condominium. While this is a general statement, the average condo board is often desperate to have new and fresh participants in their operations. This will allow one to have greater influence into the decisions made by the association, rather than simply voting on proposals put forward by the board. For some, merely participating in the meetings and regularly voting and sharing their opinions is enough. Regardless, a prudent condo owner continues to participate in some capacity in the dealings of the condo board, and doing so will ensure they are as informed as possible as to the goings-on of a significant financial outlay.
How the Condo Board Can Impact Your Purchase or Sale
There’s no denying that the operation of the condo corporation is a significant component of the home you have purchased, and while everyone has a different tolerance risk (I know one client of mine who actually tries to purchase into distressed condominiums knowing there is value to be had in fixing the issues the building is facing, everyone should have at least a basic understanding of what is happening in the condo corporation they are considering or currently owning a portion of. Doing so is a critical component of being a responsible homeowner, and failing to do so can come with considerable risk.
If you have more questions about how condominium is run, what it looks like to be involved in a condo board, or otherwise, never hesitate to reach out! We’re always keen to discuss the finer points of real estate, and will do our absolute best to provide the top quality of information to help you make an informed decision, and ensure your foray into condo ownership goes smoothly!
Do you have more questions about condo boards or buying a condo in Toronto? Get in touch today by calling 416.642.2660 or emailing admin@torontorealtygroup.com.
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