First-Time Buyer Series, Part 4: Condo Fees and the Status Certificate for Markham Condo Buyers

Welcome back to our First-Time Buyer Series. This is Part 4 of 6, and it covers a topic that surprises many first-time buyers: the costs and paperwork that come with owning a condo, beyond the purchase price and mortgage.

When you buy a Markham condo, you are not just buying a unit. You are also becoming a part-owner of the building and joining a condominium corporation. Your monthly condo fees and the building's financial health affect your budget for as long as you own the unit. The status certificate is the document that lets you look under the hood before you commit.

What Your Monthly Condo Fees Cover

Condo fees (officially called common expenses) pay for running and maintaining the shared parts of the building. Every building is different, but fees commonly go toward:

• Building insurance: the corporation's policy for the structure and common areas (you still need your own unit owner's policy).

• Maintenance and repairs: cleaning, landscaping, snow removal, elevators and mechanical systems.

• Amenities and staff: concierge or security, gym, party room, pool and property management.

• Some utilities: depending on the building, heat, water or hydro may be included or billed separately.

• Reserve fund contributions: a portion of every fee is set aside for major future repairs.

Fees are usually set per unit based on its share of the building, so larger units generally pay more. When comparing two Markham condos, look at what each fee includes, not just the dollar amount. A higher fee that includes heat and water may cost less overall than a lower fee that doesn't.

Reserve Funds: The Building's Savings Account

Ontario condo corporations must keep a reserve fund for major repairs and replacements of common elements, such as roofs, elevators, windows, parking garages and mechanical systems. According to the Condominium Authority of Ontario (CAO), a reserve fund works like a savings account for the building and cannot be used for improvements or alterations.

To decide how much to save, corporations rely on a reserve fund study. The CAO explains that a comprehensive study is done in the corporation's first year, followed by updated studies at intervals of no more than three years. The study forecasts what will need replacing and when, and the funding plan that follows sets out how contributions will keep pace.

A well-funded reserve doesn't guarantee fees will never rise, but it lowers the risk of a big surprise later.

Special Assessments: The Surprise Bill to Avoid

If a building needs a major repair and the reserve fund can't cover it, the corporation may ask owners to pay a special assessment, a one-time charge on top of regular fees. It can also happen after an unexpected event, such as a major leak or a failed system.

Special assessments aren't always a sign of a poorly run building, but they can strain a first-time buyer's budget. That's why it's important to know about any planned or current assessments before you firm up an offer.

What Is a Status Certificate?

For resale condos in Ontario, a status certificate is a package of documents from the condo corporation that describes the financial and legal position of the corporation and of the specific unit you are buying. Buyers can request one through the corporation or its management. According to the CAO, a corporation must make the certificate available within 10 days of the request, for a fee of up to $100 including taxes and materials (some corporations offer faster delivery for a higher rush fee).

A status certificate typically includes or is accompanied by:

• The current budget and most recent financial statements.

• Information about the reserve fund and the most recent reserve fund study.

• Whether the unit owes any unpaid fees (arrears).

• Any current or planned special assessments, or expected fee increases.

• Information on any legal actions involving the corporation.

• The building's insurance information.

• The declaration, by-laws and rules, which include restrictions on things like pets, renovations and rentals.

What Your Lawyer Reviews

Most first-time buyers make their offer on a resale condo conditional on their lawyer's review of the status certificate. During this review, your lawyer may look at:

• Whether the reserve fund appears adequate compared with the reserve fund study's plan.

• Signs of upcoming fee increases or special assessments.

• Lawsuits, insurance claims or major repair projects that could affect the building.

• Rules that may affect how you plan to use the unit, such as pet rules or rental restrictions.

• Whether the parking space and locker you expect actually come with the unit.

If the review raises a concern, your lawyer can explain your options while the condition is still open.

Your Condo Fee and Status Certificate Checklist

• Ask what the monthly fee includes and how it has changed over the last few years.

• Budget for your own condo insurance and any separately metered utilities.

• Make your resale offer conditional on a lawyer's review of the status certificate.

• Allow enough time in the condition period to receive and review the certificate.

• Read the rules yourself, too, so there are no surprises about pets, parking or renovations.

• Ask your lawyer to flag anything unusual in plain language.

Rules, timelines and fees can change, and every building is different. Please confirm details with your real estate lawyer, mortgage professional or tax advisor before making decisions. This article is general information, not legal, tax or financial advice.

Thinking About Your First Markham Condo?

We help first-time buyers understand condo fees, reserve funds and status certificates before they make an offer, so they can buy with confidence. Contact us for a free first-time buyer consultation or to book a viewing:

• Brant Liu: 647-867-0586 | brantliu1018@gmail.com

• Sally Jiang, CPA: 647-968-3216 | SallyJiang628@hotmail.com

Coming up in Part 5: Making an Offer and Closing. We'll walk through offer conditions, deposits, home inspections, closing costs such as land transfer tax and legal fees, and what happens on closing day.

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Brant Liu & Sally Jiang, Sales Representatives, T-One Group Realty Inc., Brokerage. This article is for general information and is not intended to solicit buyers or sellers already under contract.