7 Things To Consider Before Buying A Condo
As condominiums proliferate as the home of choice for many, it is important to realize it is a different kind of ownership than a house or freehold townhome. To make sure you’ve made the right decision here’s 7 things you should know before purchasing a condo:
1) Read the declaration, by-laws and rules
Every condo community is unique. The declaration, by-laws and rules provide critical information about the restrictions and allowances within the community. Some condo’s may have strict rules regarding pet ownership, other’s may entirely prohibit short term rentals, while some may specifically protect such use of the unit within the declaration. There will likely be rules about smoking whether it be cigarettes or cannabis. Most condominiums also have rules about visitors, whether they can use amenities independently or can only do so with a resident. These are just some examples of rules that can have a major impact on your lifestyle or plans for the condo.
2) Ask about any issues and repairs to the unit such as sink back ups, water leaks, and Kitec piping
The old adage of buyer beware applies equally to condo purchases. It’s important to ensure you ask the owner questions about the unit and take careful note of the answers. If you don’t ask the questions the purchaser may not necessarily have an obligation to disclose information that is not requested. Common recurring issues for condominiums can include sink back ups, water penetration issues, and be aware of major construction deficiencies that have come to light in the industry such as the Kitec piping problem that has resulted in costly repairs for many condo owners.
3) Know the life, age and financial health of the building, ask about whether there have been any special assessments and how much is in the reserve fund
The life of the building is critical to an appreciation of whether there remain any warranties on your unit. A brand-new purchase usually comes with a new homeowner’s warranty. Some of these warranties may still apply if you are purchasing a relatively new condo. Older condos will have a longer history and there will be more information available about the community. Signifiers of financial health will also be different for a new or younger condo build than an older one. A healthy reserve fund given the age of the building is a relative assessment. Ask whether the corporation has been following the recommendations of reserve fund studies. Special assessments can be an indicator of some problems at the building whether structural or as a matter of poor governance practices. The number of units in a condo matter and can play a role in the financial health of a condo community.
4) Ask about the owner-occupied to investor-owned ratio and talk to neighbours and people in the community
Condo’s are often microcosms of the community they are built in. Some condos are mostly investor owned and occupied by renters; some have more young adults; others may be occupied mostly by retirees. Though there is a shortage of family friendly condo communities in Toronto, some do have amenities designed with kids in mind. It’s a good idea to ask what the ratio is of owner-occupied to investor-owned and to talk to neighbours and members of the community to get a feel for the kinds of people the area attracts. Depending on your needs the transit system, schools, shops, parks, community centres in the area may also be important considerations.
5) Be aware of the reputation of the builder, and the property management company
The reputation of the builder from previous developments will give a good indication of how the community will fare over the long term. Reputable builders are less likely to cut corners when it comes to construction and this could have a big impact on maintenance down the road. Reputation of the property management company is also very important, since this is the organization that you will likely interact with the most in your community if any issues should arise. Ask how long the property management company has managed the condo.
6) Understand the boundaries of your unit and the structure – which parts, if any, of your unit are exclusive use common elements? What kind of materials divide the units up?
Understanding the boundaries of your unit is important. It’s always a good idea to also look at any other assets included in the purchase such as a parking spot or a storage locker. If your unit has a balcony or terrace there will likely be specific rules related to the use of these parts of the unit. For example most condos prohibit use of a gas or propane BBQ on a balcony, and may be non-smoking. Terraces do not always have the same rules applicable to them as balconies. Whether the units are divided by concrete barriers or drywall can make a big difference on the impact of noise pollution, which can be a common issue in some condominium communities.
7) What do the condo fees cover? How do they compare to the average for the area, and what has their trajectory been over time?
Condo fees can be a window into the financial health of a condominium community. You will want to investigate how the fees compare to other condo’s in the area, and what they include. While some older condos include utilities like hydro and water in the fees, many newer condos have individually metered utilities. The types of amenities in the building, and number of units from which the condo corporation is generating fees will play a role in its financial health as well. Many developers will entice new condo buyers by artificially maintaining very low condo fees, and these fees tend to go up in the first five years of the life of the condo as the corporation works to build up its reserves. Whereas in a financially healthy older condo community there may be more stability in the trajectory of fees.
With current new condo prices in Toronto reaching an average of $750,000, and the persisting trend of vertical development, a condo may be the most important purchase you make.
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