Buying a Condo

by Stephanie Ditta, moneysense.ca

"A home is where a person lives, regardless if they are renting or they own it," says Steve Krstinovski, condominium specialist and real estate agent in Toronto's North York.

"A common misconception is that a house is a home, but a condo is not a home," says Krstinovski. With a condominium however, you are essentially buying into a lifestyle that offers simplicity and affordable entry into the housing market, he says.


Why condos?

Condos offer less space, with no exterior to worry about, says Krstinovski. "For the working public, having a condo is great because when you come home at night you don't feel like there are chores to be done because the exterior and common areas have been taken care for you. And then the interior is the only thing for you to look after."

Condominiums are a different type of ownership, agrees Judy Nagy, condo specialist and associate broker in Mississauga, Ont.

"There is a real misconception as to what many people think a condominium is," she says. "Most people think a condominium is an apartment. But a condominium isn't a type of building; it's a type of ownership. And it can take the form of an apartment, a townhouse, or even a single detached home."

Condo starts are second only behind single family home starts in Canada, with condo developments popping up all over the country to suit every lifestyle and age group. According to Canadian Mortgage and Housing Corporation, in 1997 there were 27,471 condominium starts in centres with a population of 10,000 or more, with another 11,653 begun between January and June 1998.

Buying a condominium not only means buying into a lifestyle, it means buying into a community that is often close-knit.

That's the basic difference between conventional home ownership and condominium ownership, says Nagy. "And it's very important to make sure that the lifestyle and the type of community that the particular condominium development that you are looking at suits your needs."

Most condo communities are geared towards a particular market.

"There are some that are designed especially for retirees, some that are designed for first-time buyers, and some that are developed for upwardly mobile professionals," says Nagy.

Condominiums can cost anywhere from $40,000 to several millions of dollars, to fit any lifestyle and budget, Krstinovski says.


How do you find the condo that is right for you?

Nagy and Krstinovski recommend going to an agent who specializes in condominiums. A specialist who understands the market and the industry will be more likely to get you a better deal.

"If I have any frustration in this industry, it's agents who don't appreciate or understand condos," says Krstinovski. "The typical agent doesn't live in a condo and doesn't sell condos."

"Even the offer for a condominium to purchase is different from the one for a house," he says. "So there is a different issue at hand and most agents are uncomfortable with that."

Nagy suggests checking out the agent's experience in the condo field. And find out how familiar the agent is with the communities or complexes that interest you.

Once you establish that condominiums form the crux and foundation of their business, she says, "then you have to get more specific. If you already have a particular building or community in mind, are they familiar with that particular community? They may well be a condo specialist, but they may know a different geographical market than what you are interested in."


What to look for?

Once you've found a knowledgeable agent, it is important to understand how a condo is operated. This may require a fair bit of homework on the part of the agent and buyer, but will save you time, money and headaches in the future.

First and foremost, have a lawyer look at the estoppel certificate. "The estoppel certificate sets out the financials of the building," says Nagy. "It is a vital document for potential buyers to look at. It's absolutely essential -- you need to know if the corporation is financially sound."

The estoppel certificate will contain the following information:

1. A legal description of the unit.

2. Maintenance fees. A monthly maintenance fee covers repairs and maintenance to the common elements within your building. Common elements of a building include hallways, parking garages, recreational facilities, and any electrical or plumbing systems. Exterior maintenance including lawn mowing and snow removal are usually included in this fee.

3. Whether there are any legal proceedings for or against the corporation.

4. Reserve fund. The reserve fund is a portion of the maintenance fees put aside for extraordinary maintenance and repairs that happen over the years. There is a minimum amount, usually 10 per cent, which is required by law, depending on the size of the condominium. "What you would like to see is a really healthy reserve fund so that you know that if there is any major repairs, there is money there to cover it," says Nagy.


It is also important to find out if owners or investors occupy the building that you are buying into. "It's really important that the condominium community you buy into is owner occupied," says Nagy. "If it is investor occupied, then they will want to rent the property out."

Also check out where the condo is located -- is it close to transportation, hospitals, shopping and schools?

Nagy suggests checking out the location of your suite within the condo. Do you want a unit that is ground level or near an elevator? "Even within the building itself, the location of the suite will make a big difference to the desirability of that particular unit and, of course, that is reflected in the price."

Nagy recommends going into the condo community and talking to the people who live there. "Ask them how they like it, and do they have any problems or concerns. Ask how well it is run, and are their concerns being addressed properly by the management and the (condominium) board," she says.


How are condos operated?

The owners of the units elect a condominium board from volunteers within the community. Boards can have as few as three members and as many as seven, and are usually elected for one to three years.

"Sometimes when the building is new, the developer will appoint somebody from their side, because there is not enough people interested." says Krstinovski.

"The more established the buildings are, usually the better they are looked after," he says. The more investors there are in the building, the harder it is to interest someone in sitting on the board.

Rule and regulations can very from condominium to condominium. Some of the most common will outline how many occupants can live in a suite, whether or not pets are allowed, and regulations with regards to common elements.

A developer sets up a condominium and releases a declaration that is registered by the developer. The declaration is a description of the property -- its size and boundaries and the extent of the building. Bylaws are then registered which regulates the operation of a building.

"Basically, the declaration describes the property, and the bylaw describes the operation of the property, says Gerrit Roosenboom, president of his condo in Richmond Hill, Ont.

"It is then incumbent on the board of directors to make sure the bylaws are the rules are lived by," says Roosenboom. "The developer may or may not enact a bunch of rules. But generally they'll wait until they get quite a few of the condominiums sold and then the owners collectively through their board of directors will develop some rules that enhance, or go further than the bylaws."

Roosenboom says that the bylaws are very strictly enforced "and that is the responsibility of the board to ensure that the bylaws and rules and regulations are upheld."

Sitting on the board can be a rewarding experience for people who want to become involved in their new community. Roosenboom has been living at his condo since 1991, and has been a board member since 1993. "I was first appointed to the board when I became a new owner and expressed an interest in participating," he says.

Study the board of directors at the condo that interests you and obtain current copies of rules, restrictions and bylaws. You purchase a unit within the building, but the rules apply to you even behind your four walls of space. Understanding and following the rules will enhance your level of comfort within the building and will lessen the likelihood of later feeling compelled to move out.

If you research the industry and the community that interests you, you will be more likely to find a unit that is right for you. That accomplished, you can then tackle the challenge of making your new dwelling a true home.