Condominium Ownership In Alberta
A lot of Canadians do not realize that buying a condominium (condo) is quite different from buying a house. Unlike owning a house, condominium ownership has unique legal rights and financial obligations. For example, condo owners have access to common areas, can vote on matters and can sue developers or condo corporations for breaches. Condominium ownership also means there are certain responsibilities, such as paying their condo fees on time and following the condominium bylaws and rules.
Thinking of condominium ownership? No matter if you live in Calgary, Edmonton or any city or town in Alberta, this information applies. Here are some basics of what you should know about condo ownership.
What Is A Condominium?
Residential condominiums include apartments within an apartment building, a duplex, a bungalow or a townhouse. Legally, a condominium is a form of real property ownership with two separate parts. Condominium ownership has a legal title to the condominium unit (freehold ownership) so you are responsible for maintaining/repairing everything inside the unit. You are also a joint owner of the condo’s common property, along with the other condo owners, to pay for the costs of the building upkeep.
Before buying a condo unit, make sure you understand the difference between what you own and what you jointly own with other condo owners. Condominium ownership shares the expenses of maintaining the common property. this includes everything identified by the condominium plan not located inside an individual unit. Examples include the hallways, elevators, laundry rooms, swimming pools, and landscaped areas.
What Is A Condominium Corporation?
When a developer registers the condo plan with Alberta’s Land Titles Office, a condominium corporation is created which identifies who the owners of the condo units are. The condo corporation is a legal entity. This means that it can sue for any damages done to the common property, or be sued for things that the owners are partially responsible for.
How Condominium Corporations Governing Occurs?
Condo bylaws govern the corporation. Condominium ownership requires that owners and tenants living in the condo units obey the bylaws, or risk facing a fine. These bylaws can differ greatly depending on the condo building. For example, some condo bylaws ban children under a certain age and/or pets from living in the complex. Another common bylaw is the requirement to get written approval from the board of directors of the condo before starting any renovations that could impact the building’s structure such as putting up a satellite dish. It is important to know what your legal rights and responsibilities are as set out in your condo’s bylaws.
You can find out your condo’s bylaws by looking at your condo’s registered plan. If there are no bylaws and your condo was built after May 16, 1978, the bylaws in Appendix 1 of the Condominium Property Act (“the Act”) will apply until they are replaced. Learn about the Condominium Act most recent changes here. If your condo was built before May 16, 1978, the Condominium Property Regulations in Appendix 2 of the Act will apply. Understanding your condominium bylaws is an essential part of condominium ownership.
Can Condo Bylaws Change?
Yes! Condo owners can vote to change the bylaws at any given time. In Alberta, the Act states that there must be approval from 75% of the unit title owners that make up more than 7,500 unit factors in order for bylaws to be changed. These changes are effective once the condo board registers them at a Land Titles Office. Many boards currently seek to make important changes with regards to the legalization of Cannabis.
Who Is On My Condo’s Board Of Directors?
Each condo corporation will have their own process on how each director is elected, how often they are elected and eligibility requirements. All directors must form part of the condominium ownership group. The board then discusses issues in regular meetings typically held on a monthly basis. The meeting agenda must be communicated to owners at yearly general meetings.
What Is The Board Of Directors’ Role?
Legally, each person on the board must act honestly and in good faith. This means that if there is a conflict of interest in a matter, they cannot vote on it. Also, decisions must be made in the best interests of all the condo owners in the building, which may sometimes conflict with what an individual owner wants.
If you are thinking of buying a previously owned unit, you should speak to other condo unit owners in the condo complex. Ask them whether the condo owners and board members get along, if there are issues with the condo in the past, if there are existing problems with the building (i.e. problems with plumbing and utilities) and whether the condo is well managed. This will give you an idea as to whether this is the kind of community you want to live in
What Are Condo Fees?
Condo corporations are in charge for the up keep of common properties which include snow removal, utilities, lawn care, and repairs to the common property. They must also pay for the insurance and administrative expenses (accountants and lawyer fees) related to the common property. Condominium ownership requires the payment of these fees.
They get the money to pay for these things from each condo owner who pays a condo fee. The amounts of these fees are set every year, but sometimes, the corporation is in need of extra cash and may need to raise money to pay for emergency repairs. Make sure you know how the condo board plans to collect the extra funds. For example, if the board suddenly requires a special assessment for $10,000, what options exist for payment? Can you afford it?
The Reserve Fund
Part of your condo fees also go towards a reserve fund which is usually used for major repairs and replacement of property and common property owned by the corporation such as replacements of the building’s roof, parking lot asphalt and landscaping in the common property. Condo corporations have a responsibility to keep a reserve fund. Before using the fund, the board must consult the owners.
Generally, the condo board sets the condo fees based on the forecast budget for that year. The amount of your condo fee is based on the unit factor which is usually related to the size of the unit you own – usually, the bigger the unit, the higher the fees. Be aware that condo fees can, and often do, go up every year.
Knowing The Condo Fees Before Buying
Before getting into condominium ownership, make sure you know how much your condo fees are, how much of your condo fees goes to the reserve fund, if the condo board is planning to pay for a large expense with the reserve fund and how the condo board plans to raise these funds in the future. You can get this information by asking for a copy of the condo’s reserve fund plan and the yearly report. Always ask for a copy of the reserve fund study report. It identifies how much money is currently in the reserve fund, the present condition of the property, and anticipates what areas of the common property needs repaire or replacment within the next 25 years.
Condo Financial Statements
Also, make sure you review the condo corporation’s current financial statement (which tells you its financial status), the current budget for repairs, the annual general meeting minutes (which tells you if there are any issues with the condo), and ask for evidence of adequate insurance coverage. We recommended getting legal help to review the condo documents. If a condo corporation is in debt, it can become a bottomless money pit that can make it very difficult if you wish to sell your condo unit in the future.
What Happens If I Do Not Pay My Condo Fees?
If you do not pay your condo fees, the condo corporation can do a number of things to collect what you owe, such as:
- ask the condo owner’s mortgage company to repay the amount owed, who will add the debt to the total mortgage amount owed;
- ask the tenant in the owner’s unit to pay the monthly rent to the corporation to pay for your condo fees;
- file a caveat against the unit owner’s title;
- charge interest on the amount owed (up to 18% per year!);
- sue the owner for the amount owed, including the interest and full legal fees; and
- foreclose on the owner’s title (take possession of condo unit ending your condominium ownership).
Also, if you owe money to your condo corporation for 30 days or more, you can lose your right to vote on important matters that impact the condo building.
Buying A New Condo From A Developer – What To Look Out For?
Before signing a purchase agreement, it is important to speak with a lawyer. The experienced real estate team at Kahane Law Office help you review the paperwork. This helps ensure you protect your legal rights and interests.
Purchase Contract Required Documentation
Legally, the Act requires developers to provide you with a copy of the condo building’s mortgage. While not required by law, if requested, many developers will also provide buyers with proposed budgets for the development. As a buyer of a new condo development, your purchase agreement must include a condo plan which tells you about:
- any major improvements to the condo’s common property;
- maintenance equipment used for the upkeep of the common property;
- recreational facilities in the building;
- the calculation of the unit factor;
- determining the calculation of your condo fees; and
- a notification on the front page of the purchase agreement that tells you about your rights surrounding cancelling the purchase agreement.
Other Condominium Ownership Building Related Documentation
In addition, the developer must also provide you with a copy of:
- the bylaws (or bylaws planned);
- property management agreement (or proposed property management agreement);
- for condos built on leased land, a copy of the lease agreement;
- existing mortgages, or future mortgages that may impact your ownership title of the condo unit; and
- the corporation’s financial statements. These provide you with information about how reasonable the corporation’s budget is and the reserve fund study.
Note: when buying a new condo from a developer, check to see if the condo is covered under a purchaser’s protection program such as the Alberta New Home Warranty Program. This means that if you discover a defect in your new home and the warranty period is still active, the builder repairs it for free.
Pre-Owned Condominium Ownership – What To Look Out For?
While any number of issues arise when people purchase a condo unit, simple steps help avoid them. For example, when considering a pre-owned unit, please understand the the following:
If you are buying a pre-owned condo, the law does not require developers to disclose any documents to you. It is your responsibility to obtain and understand any documents before you making an offer. You can submit a written request to your seller who must provide them to you within 10 days. Make sure you get a copy of:
- the condo plan and any additional sheets attached to it, such as endorsements (optional insurance coverage for your property);
- the certificate of insurance. A document that tells you how much insurance coverage there is on both the individual units and the common property;
- the condo unit’s certificate;
- any existing restrictive covenants. These include legal obligations binding on future buyers of the condo and prevents you from doing certain such as renovating the unit; and lastly
- the condo bylaws
Your lawyer should get an Estoppel Certificate for you. This means that with your new condominium ownership, you will not owe any amounts due from a previous owner. For more detailed information regarding Estoppel Certificates in Alberta, please refer to this page. However, we include the basics as they relate to your condo below.
Although there may be a fee involved, you can request for an estoppel certificate from the condo corporation which certifies that the information they provide to you is correct. The certificate will tell you:
- how much the condo fees are for each unit;
- the condo fee payment schedule;
- if the previous owner has paid his/her share of the condo fees; and
- any interest owed due to unpaid condo fees.
Knowing this information allows your real estate lawyer to deduct any outstanding condo fees/interest owed from the purchase price of your condo.
Need Help With Condominium Ownership: Condo Real Estate Lawyers In Alberta
Buying a condo can be one of the biggest purchases you will ever make. Condominium ownership is exciting but may also be scary to a first time buyer. We want to help complete your purchase without stress or headaches! We help you obtain and understand all aspects of condominium ownership. The real estate lawyers at Kahane Law Office in Calgary, have extensive experience with handling the sale and purchase of residential and commercial condominium units. You can reach us in Calgary at 403-225-8810 or email us here directly..