Richard & Liz Bergeron

Calgary’s Real Estate Specialists

Richard's Cell: 403-819-2331 | Liz's Cell: 403-875-8470

Cash In The Bank For Common Areas

When condo buildings were constructed in the 1970’s and 80’s it was very popular for a building to have amenity areas for the owners. These may have included group/party rooms, saunas, hot tubs, exercise areas and change rooms. Over the years many of these have fallen into disuse or disrepair. On average, a small percentage of owners utilize these amenities. The emphasis placed on keeping them maintained and updated is diminished.

There is a financially rewarding option many condominium corporations are currently exploring. More and more are looking to sell these areas, either renovated or not, as individual residential units. There are several factors driving this trend in condo buildings.

The first is obviously the great increase in condominium property value Calgary has experienced over the past several years. Condo boards are eyeing the large sums of money that the corporation could realize from selling the unused or under-utilized common areas in the building as individual units. This money could be used to re-furbish other common areas such as the halls and lobbies or be put to major capital expenditures such as replacing old elevators or roofs, thus alleviating the need for special assessments or higher condo fees. Remaining funds could be allocated to the reserve fund for future use. Updating and upgrading the building would increase the overall property values of units in the building, thereby benefiting all owners.

The second reason for this trend is that these underutilized areas are usually a drain on the collective expenses of the building. They still need to be heated, cleaned and maintained. Boards are looking to turn this expense into an asset.

A third reason is that with another unit in the building paying condo fees, each owners monthly fees may actually decrease.

The process to convert common area to individual ownership is a lengthy one and involves the services of a qualified condominium lawyer as well as the guidance of the management company. A special resolution needs to be passed by 75 % of the ownership (not always an easy number to achieve). The condo plan needs to be resurveyed with new unit factors assigned to each unit. A title needs to be created for the new unit and each title in the building needs to be amended with their new unit factor. This whole process can take over a year and in some cases several years! Given the Calgary real estate market, the financial rewards for the corporation can be great and outweigh the time, effort and expense required.

Currently there are several buildings in the Beltline in various stages of this process. Over time buyers will see more of these situations as they look to purchase resale units, or even one of the former common area suites.

Data supplied by CREB®’s MLS® System. CREB® is the owner of the copyright in its MLS® System. The Listing data is deemed reliable but is not guaranteed accurate by CREB®.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.
The trademarks REALTOR®, REALTORS®, and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.