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Quick Tips for Buying a Condominium
Whether you are a first-time buyer or have lived in your condo for years, the Condominium Act, 1998, is designed to protect your investment, improve the day-to-day operation of your condominium and allow for new kinds of condominium developments.
For access to the acts and regulations, visit the e-Laws site.
It’s often said that buying a condominium is buying a lifestyle. What does this mean?
Condominium living is different from owning or renting a detached house, townhouse or apartment because condos have a dual nature. Condominium owners hold title to their units and share responsibility for the operating costs of the balance of the property (common elements such as lobbies and hallways), that makes up the condominium corporation.
Advantages to condominium ownership include:
- it may be less expensive than other types of home ownership.
- it can provide an "instant" sense of community.
- maintenance of the property is contracted out to outside parties
- participation in the corporate community decision-making.
But condominiums are not everyone’s cup of tea. Condominium corporations may set restrictions on such things as owning pets or having an outdoor
barbeque.
Ontario's Condominium Act
The act provides strong protection for buyers by setting out information (e.g. whether the developer intends to lease some of the units) to be provided when they buy a unit. It makes sure owners have a say in the way the corporation is run. It also establishes new types of condominiums.
When purchasing a new condo from a developer if you change your mind and decide you want to cancel the contract, legislation includes a 10-day cooling-off period from the time you receive a copy of the signed purchase and sale agreement or the disclosure statement, whichever is the later. In some circumstances, you may have additional time to cancel the contract, especially if there has been a material change that departs from the original agreement as defined in the act
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Making the Fine Print Clear
Some new condo buyers say they do not know what they’re getting when they buy a condominium.
The developer must provide a table of contents as part of the disclosure statement. The table of contents helps the purchaser find information quickly and easily in the declaration, by-laws, rules or disclosure statement about such things as whether a building on the property has been converted from a previous use or any restrictions on pets.
Purchasers will want to look closely at the types of facilities and services that are offered. The Ontario Human Rights Commission has ruled that adult-only buildings discriminate against families. However, some condos do aim to meet the specialized needs of families with small children, for example, by providing playgrounds. Others may be built with seniors in mind.
How is the Condominium Run?
A board of directors, elected by the owners, runs the condominium corporation. The board’s function is to manage the corporation. The requirement ensures that if at least 15 per cent of the units are owner-occupied, one position on the board is reserved for election by owner-occupants. In this way, owner-occupants are assured representation on the board.
Major decisions are voted on at owners’ meetings. Under the act, annual general meetings must be held within six months of the end of the condo corporation’s fiscal year to ensure that unit owners have an opportunity to review the financial statements in a timely manner. Participation in community decision-making is a benefit of condominium living.
New Kinds of Condominiums
The legislation makes possible new kinds of condominium developments:
Phased condo. Although you may have seen condos advertised as phased in the past, today they are really separate condominium corporations. Under the act, units and common elements can now be added in stages, over a maximum 10-year period, as part of one condominium corporation.
Common elements. These are condominiums that consist only of common elements, but no units. For example, homes could be on separate pieces of land, with facilities such as a golf course or recreational centre as the common elements condominium.
Vacant land condo. Under this type of condominium corporation, the units can consist of vacant land upon which, following registration, owners can decide later what to build. This may be suitable for a mobile home development, for example.
Leasehold condo. These are units built on land that is leased by the developer to purchasers who will never own the land. They buy a leasehold interest in the unit and common elements for a fixed number of years. This interest can be sold.
A performance audit requires an inspection of the common elements of new condominiums, such as the foundation, walls, doors, roof, parking garages and elevators. This is to ensure that any major problems are found before the 12-month deadline for submitting warranty claims under Tarion Inc., formerly know as the Ontario New Home Warranty Program. The performance audit also includes a survey of owners, asking them about any damage to their units caused by defects in the common elements.
Reserve Fund Studies
A condo corporation must maintain a reserve fund for the sole purpose of paying for major repairs and replacement of the corporation’s common elements and assets. Corporations are required to conduct a reserve fund study to determine whether the fund will cover these costs. Once the study is done, the board proposes a plan to ensure the reserve fund is adequate. All owners must be given a notice containing summaries of the study, a plan and a statement indicating any differences between the two.
All existing condominiums must have completed a reserve fund study by May 5, 2004. The fund must become fully funded within 10 years of the study. New condominiums must complete a study within one year of registration, and the fund must be fully funded by the end of the following fiscal year.
Amalgamation
The corporations of standard condominiums (i.e. existing condos) will now be able to amalgamate. This can help lower costs and make administration simpler by pooling resources. A meeting of owners must be called to consider amalgamation with another condo corporation.
Changes in Declarations
A declaration is the constitution of the condominium corporation and sets out what interest each owner has in the common elements and the percentage each must pay in common expenses.
To change the declaration, you need the support of the owners of at least 80 or 90 per cent of the units, depending on what is being changed. For example, under the act to change contributions to common expenses for each unit, 90 per cent of the of the owners would have to agree. If pet ownership is covered in the declaration, 80 per cent support would be required.
Resolving Disputes
The Condominium Act, 1998 allows for dispute resolution through mediation and arbitration. If mediation and arbitration don’t succeed, the matter can still go to court.
If you require more assistance, see the Need Help section offered by the Ministry of Small Business and Consumer Services
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