Before you buy a condo in Winnipeg, it is essential to understand the various fees and reserve funds associated with a particular building. The costs can vary, and it is necessary to budget for them. While a condo living arrangement means you are less likely to incur a considerable expense for repairs or maintenance, there are fees to cover. It may seem confusing at first, but a good Winnipeg realtor will guide you through the process.
The corporation has to break down the total cost of condo fees so you can see them itemized. Such expenses include snow removal, cleaning of the common areas, and maintenance of the heating and cooling systems. There are also reserve funds for more expensive repairs. The time will come when the building needs a new HVAC system or a new roof. Where does that money come from? Hopefully, there are enough funds in reserve, or the residents must pay more to cover those expenses.
The size of the unit determines the condo fees, too. It is based on square footage. This is important because some condo units may be smaller than others. It is reasonable that someone living in a larger space with two bedrooms and two bathrooms would cover more condo fees than someone in a smaller one-bedroom and one-bathroom unit.
What Is Included In Condo Fees?
The list of what is included in condo fees depends on the specific building. While many are common costs, others are specific to that building only. The list of those fees and what they are for has to be disclosed to each resident. It is important to note that condo fees can increase annually, too. They can increase based on the economy and the cost to cover those expenses.
One of the perks of living in a condo is only taking care of the inside of your unit. The condo fees typically cover everything else. You don’t have to worry about maintenance, a yard, or even removing snow in the freezing winter weather. Condo fees are in addition to your mortgage on the place. It is essential to confirm you can cover these costs in your budget. If you are on a fixed income, will you still be able to cover them if the prices increase in the upcoming years?
Shared elements of any condo building are what the condo fees cover. Everyone pays the same amount to cover those amenities and perks. It doesn’t matter if you use them or not. They are there for you to benefit from if you wish to, and you are charged the fee for them no matter what. For example, you can’t opt out of the condo fees for the pool or the gym because you have no intention to use those facilities on site.
Condo fees may include the utilities; each unit pays a set monthly amount. In other scenarios, each unit is responsible for paying those utilities separately. They are billed based on the actual amount used for that unit. The most common condo fees a building may have include:
- Cleaning of common areas
- Garbage collection
- Insurance for the building (you will need your own insurance for your contents)
- Management fees
- Snow removal
- Utilities (heat, water, sewer, air conditioning, electric)
These condo fees are collected monthly to cover routine costs. The prices are based on the rates known at that time. The board will monitor it and notify the residents through regular meetings if there will be an increase for the following calendar year.
Condo Reserve Funds
Contributions to a reserve fund for a Winnipeg condo are similar to putting money into savings for repairs or emergencies. Each condo owner has a set amount to contribute annually to the reserve funds. When money is spent from that fund, it has to be documented, sharing the date and the specific expense the funds were used for. Residents and potential condo buyers can see the records for the reserve fund at any time.
Reserve funds are paid monthly in addition to the routine costs of operating the building. The money is set aside to cover significant repairs or replacement costs. The money is typically placed into a savings account for the building. When there are unexpected costs that come up, funds can be used from the reserve to cover them. This prevents residents from contributing more money.
When a condo building is new, the reserve fund will be low because there shouldn’t be anything to pay for immediately. The money contributed to that fund can continue to build with each passing year. When there are additional maintenance costs or expensive repairs, there should be enough money in the reserve fund to pay for it. The money in this fund shouldn’t be used for anything else. The older a building is, the more likely it will need funds to pay for various expenses.
Reserve Funds Study
The regulations in Winnipeg require a condo building to have a special assessment conducted by 2018. For condos built after that time, they have 3 years from the date the place was completed for a reserve funds study to be finished. An expert does this to forecast any upcoming needs and costs. This assessment can help determine how much each unit has to pay toward the reserve fund annually. For condo buildings with more than 9 units, the special assessment has to be done by a party not associated with the condo corporation.
A reserve funds study has to be conducted every five years for each condo building. This assesses how much money is in the fund and anticipated costs. The board should share this information with residents at regular meetings so they know about the updated reserve funds study and how that affects the contributions to this fund. Any potential buyers should ask to see the last reserve funds study. They should pay attention to the details in it and the date it was completed.
While unexpected repairs and costs can arise, the reserve funds study is a good indicator of what will likely happen in the next couple of years. For example, if the roof is 10 years old, it is reasonable to expect it will need repairs or to be replaced in the next few years. If the HVAC system is older, it is reasonable to assume it could require repairs or to be replaced within the next five years.
Most of the time, a reserve funds study is conservative. It would be impossible for them to foresee everything requiring spending money. As a result, the reserve fund could be depleted, or it could have less money than necessary for significant work.
Everyone who owns a unit in that condo will be responsible for the additional cost beyond the reserve funds should there be a high expense. The amount each unit owner pays is based on their percentage of ownership in the building. The more square footage a unit has, the more they will be responsible to cover.
Condo Special Assessment
When there isn’t enough money in the reserves to cover the cost of the condo building, a special assessment can be applied. The price each owner pays depends on the shortfall between what is in the reserves and the amount of money for the item. It isn’t reasonable for the building to function correctly without those costs being covered, and this is the only way to make sure it is taken care of timely. A new boiler, new roof, or a new heating/cooling system are the most common reasons a special assessment would apply.
When you are in the process of buying a condo, make sure there isn’t a special assessment in the works at that time. If there is, make sure the current owner will cover that cost before you buy the unit. Otherwise, you may incur that additional cost on top of the purchase price for the condo. It may seem unfair, but if you didn’t look into this information, then it may be a financial responsibility that falls onto your shoulders to pay for.
Bylaws For A Condo In Winnipeg
A lot of rules changed in 2015 when Winnipeg created the new Manitoba Condo Act. Bylaw changes were a part of the new Act. Each condo building can have its own bylaws in Winnipeg that owners and residents must abide by. One of them often pertains to the leasing/renting of a unit to someone who isn’t the owner. There can be additional fees that have to be paid for this type of scenario to be approved. Other bylaws can deal with overnight guests, the use of common areas, and even if pets are allowed in the condo units.
Fines can be imposed for disregarding the bylaws of a condo. These policies are in place to ensure everyone can live together in harmony. They are designed to make the environment safe, relaxing, and comfortable for all living in that condo building.
It is also a good idea to understand the condo fees, bylaws and reserve fund if you plan on buying a condo, especially if it is for a long term investment.
Condo Fees Frequently Asked Questions
Are condo fees negotiable?
Condo fees aren’t negotiable; they are disclosed, and the unit owner agrees to pay them. They can increase too due to the economy. There can be additional fees if there is a need to pay for something and the reserve fund doesn’t have enough money.
Are condo fees a waste of money?
Condo fees are in place to ensure the building continues to be excellent and kept up. Otherwise, repairs could turn into significant replacement costs. The structure can be neglected and show signs of age when condo fees aren’t used for maintenance and upkeep. This can make the building unsafe to live in. Some people feel condo fees could be a better use of money if they use only a few of the amenities the funds cover.
Why are some condo fees so expensive?
Some condo fees are expensive because it isn’t cheap to replace major heating/cooling systems, a boiler, or a roof on such a building. Others, such as a levy imposed when a unit is rented out, are there to deter the owner from renting/leasing the unit to others.