If you own a condo you pay condo fees. It’s a necessary part of condominium life, given that common property expenses, management and reserve fund contributions need to be jointly paid by all owners. But not many of us are fully acquainted with some of the nuances behind the fee.
Most owners assume that the condo fee amount they pay is based on the unit factor of their unit and that is based on the size of their suite compared to all the others in the building. The larger your suite, the larger your unit factor. But this is not always the case. In fact, there is no regulated standard for how unit factors are determined. They can be up to the discretion of the developer. This leaves the door open for a developer to assign unit factors based on the approximate market value of each unit. This could mean that the higher a unit is in a building, not only does the price go up but the associated condo fee would also go up compared to a similar sized unit lower in the building. Or in the case of a townhouse complex the developer could give each unit the same unit factor irregardless of the size of each unit. Each unit would then pay exactly the same condo fee as each of their neighbours. This is quite customary in bare land condos.
Of course the fee you pay is based on your proportional share of the annual budgeted amount for the building. If you don’t like the fee you are paying, there isn’t much you can do about reducing the number of unit factors you have. The only variable to manipulate is the budgeted amount. I have seen many condominium boards take an aggressive stance when it comes to the budget. Many cost saving measures can be implemented if a board is savvy. Look for opportunities to reduce energy costs, renegotiate contracts for management, janitorial or landscaping positions, look at fixed contracts for utilities, all which could lower the total budgeted amount for the building. If you have some ideas on how your building can save money why not volunteer for the board? Condominium boards are always looking for enthusiastic, solution oriented owners.
And remember that condo fees are not optional! In the rare instance where an owner does not pay their fee over a period of time, the board has the power to caveat an owner’s property for the outstanding amount. In the event the property is sold, the outstanding balance is the first item to be paid from the proceeds of the sale, before any outstanding property taxes or mortgages! Condo fees carry a lot of responsibility and clout. They ensure your condominium communities ongoing financial feasibility and look after you and your neighbour’s mutual investment.