Buying a condo: what to check beyond the unit

When you buy a condo you own your unit and share ownership of the building with everyone else. That means the building's finances and rules matter as much as the apartment itself.

The short version: check the fees, the reserve fund, any special assessments, the rules and the documents before you remove your conditions. A cheap condo with a weak reserve fund can cost more than a pricier one with strong finances.

The monthly condo fee

The condo fee pays for shared costs such as building maintenance, insurance, reserve fund contributions and sometimes heat, water or parking. Ask:

• What the fee covers, and what is extra.
• How much it has increased in recent years.
• Whether a big increase is planned.

Lenders count part of your condo fee, usually 50%, in your debt ratios, so higher fees reduce what you can borrow. A $450 a month fee adds $5,400 a year to your costs, and about $225 a month counts toward your debt ratios.

The reserve fund

The reserve fund is savings for large repairs, such as roofs, elevators, windows and parking garages. Ask for the latest reserve fund study to see whether it is healthy and how it will be funded. If it is not, owners may face special assessments, which are extra charges, or large fee increases.

Documents to review

Your lawyer should review the building's documents, including the status certificate, which sets out the fees, legal disputes, insurance and planned repairs (other provinces use different names for it). Also read:

• The declaration, bylaws and rules.
• The last two or three years of financial statements and the budget.
• Minutes of recent board meetings.
• The building's insurance summary.

The rules

Read the rules on pets, rentals, short-term stays, renovations, noise, smoking and move-in fees. Some buildings limit or ban rentals, which matters if you plan to rent out the unit later.

The building and the unit

• Age and condition: older buildings may need major repairs. Newer ones may have builder warranties.
• Elevators, parking and storage: ask what is included and what is extra.
• Layout and noise: visit at different times of day.
• Appraisal and financing: lenders may be stricter about condos, so confirm early.

Insurance

You need your own unit owner's policy for your belongings, improvements and liability, and to cover the deductible if the building's insurance charges owners for a loss. Ask how the building's deductible is shared.

Checklist

• Fees: what they cover and how they have changed.
• Reserve fund: size and last study.
• Special assessments: any past or planned.
• Rules: pets, rentals, noise, short-term stays.
• Building: age, repairs, elevator and parking.
• Insurance: your own policy plus the building's.

Why it matters

An inexpensive condo with a weak reserve fund can cost more in the long run than a pricier one with strong finances. Have a lawyer review the documents before you remove your conditions.

Terms and procedures vary by province.