Why Do Condominium Owners Pay Condo Fees?
Often I hear the comment that buying a condo feels like you still have to pay rent – referring to the monthly condominium fees. True, all condo owners are required to pay condominium fees. But what is misunderstood, is what these fees are used for. If you own your own home, you pay for maintenance, insurance, water and sewage, and hydro. You also pay for lawn care services or alternatively you buy the tools and supplies and take care lawn and garden beds yourself. If the roof needs to be repaired, you pay for the repairs, either by taking it from savings, using a line of credit, or perhaps remortgaging your home.
Condominium fees pay for all of these things. Regular maintenance, insurance for the condominium corporation (including all of the common element property), water & sewage, security systems, fire alarms systems, elevators, lawn care and garden beds, snow clearing services, window washing, maintenance and repairs of amenities such as fitness equipment or pools, and contributions to contingency and reserve funds.
- A Contingency Fund is used to offset any unexpected expenses in the current fiscal year. For example, if hydro fees exceeded te budgeted amount, the Contingency Fund would be used to cover the shortage.
- A Reserve Fund is used to offset the expenses for future major repairs and replacement of common elements of the condominium corporation. For example, the replacement of the roof or painting of the entire exterior of the building would be funded by the Reserve Fund.
Condo owners are still responsible for the interior of their units. So, a condo owner should carry insurance for personal property, liability for incidents inside their units, and coverage for any upgrades they make after the original purchase. This includes insuring the installation of hardwood flooring or kitchen/bathroom upgrades.
And condo owners are responsible for repair work inside their own units. This includes painting the unit or paying for the services of a plumber for a blocked sink. This can also include hydro usage for their unit and other services, such as telephone, cable, and internet.
To compare, a home owner should add up all of the annual costs of house maintenance and repairs, insurance, window cleaning, yard maintenance, security, fire alarm system, pool and fitness equipment maintenance, water and sewage, and snow removal. These, along with the costs associated with future repair and replacement of major components of their house, would very likely equal the monthly costs of typical annual condominium fees.
Keep in mind, taxes are assessed on each unit and are not covered by the condominium fees. Owners pay for their own taxes, based on the assessed value of the individual unit. Currently in New Brunswick, the residential tax rate is the same for condos as it is with an individually-owned house.
There are lots of options available in condominiums. Choosing a condo complex with the amenities that fit your lifestyle can keep costs at an affordable level. You may not use a pool, fitness room, or tennis court. But remember, if you currently pay for a gym membership or own fitness equipment, the costs of these would be saved if you chose a condo with these amenities included in your condo fees.