Understanding Your Condo Maintenance Fees

By Todd Rowley

Entering the housing market can be a daunting experience, but the consideration of condo fees can muddy the already-cloudy waters of home buying. Homebuyers find themselves asking questions like, “Why am I paying fees on a home I just purchased?”, “Who sets these up?”, “What’s included?”, and “Am I paying too much?”

If that sounds like you, you’re not alone. Today, we will set out to answer some of your questions. Condo fees exist as part of the operational costs of being an integral part of your condo corporation with clear parameters laid out for their governance.

Who sets these fees?

Condo fees are established through one of two options based on the condo. Developers set the fees on a new build, while fees for an existing condo is managed by the condo board.

Condo boards set their operations budget on an annual basis, with the condo fees making up the income to the corporation. It is up to each board to continually review and determine the necessary fees to cover costs and anticipated expenses. The upkeep and maintenance of the property must be considered in the long term and a reserved fund is required under provincial legislation. 

How are fees set?

Condo fees are non-negotiable and based upon your share, or value, of the building or land that comprises the corporation. For example, if your condo comprises 5% of the overall value, your condo fee is 5% of the operational expenses. While proportional cost sharing is the general premise for fees, some condo boards choose to impose a premium on select properties. For example, a 1200 sq ft unit on the second floor overlooking the parking lot would carry a different value than a same-sized unit on the 12th floor that overlooks the park. The parkview property would contribute greater value to the corporation thus drawing, potentially, a higher fee. This approach varies from condo to condo so be sure to check into the manner in which fees are set prior to your purchase.

New Build vs Established Condo

As new builds continue to rise from the ground up, some developers reduce condo fees on new builds to help draw in buyers with the perception of lower costs. While these are certainly appealing, especially for first-time buyers, these lower fees are not sustainable.

Keeping fees too low results in a diminished reserve fund that is ill-equipped to cover major long-term projects like roof replacements and major repairs. When major repairs and maintenance are not being completed due to neglect or insufficient finances, your condo, and the entire condo corporation, loses value. Remember that as a condo owner, you are not only responsible for what is contained within your four walls, but in part for the entire property.

What’s included in the fee?

Condo fees are comprised of three main components, though these may not all apply in all condos: reserve fund, utilities, and common areas.

Many new developments have been designed with individual heating and cooling systems which are the responsibility of each owner, while older condos have a communal resource that is covered through the utility inclusion in the fees. Check ahead to determine your responsibility for your condo’s heating and cooling system.

Maintenance of the grounds and the physical properties needs to be attended to by someone. The condo board is responsible for contracting, hiring, and issuing payments for all related work to maintain the property. While some owners have a degree of freedom in their individual landscaping, the governance of the board provides guidance on the matter while overseeing the overall work of the grounds and property that includes cleaning and maintenance of the common areas, snow removal, window washing, and lawn care.

What should I expect to pay?

Fees fluctuate between properties. Generally speaking, an condo in Toronto that lists at 800-1000 sqft currently show fees ranging from $.75-$1.30+ per square foot. There are, of course, exceptions to this, but overall buyers must be fully aware of the costs they are assuming and understand what is included in the pricing and fees.