What Do Condo Fees Cover in Ontario and What Is Left to You?

Condo fees are not a single bill for one thing. They fund the shared parts of the building and the way it is run, and some costs still stay with you.

This article explains what common expenses typically include, how your share is set, and which costs can come on top.

What your monthly fees pay for

Common expense fees pay for maintaining the common elements, reserve fund contributions, and services such as cleaning, building maintenance and condo management.

• Maintaining the common elements
• Contributions to the reserve fund
• Services such as cleaning, building maintenance and condo management

Whether any other costs are also covered by your fees depends on your building and your situation, so it is worth confirming with a lawyer before you rely on it.

In plain terms, your fee covers the shared costs of running the building. The corporation repairs damage to the standard unit as defined in its governing documents, and you repair everything outside that definition, however the damage was caused. Reading the budget line by line is a good way to see where the money goes.

How your share is set

Each owner's share of common expenses is a percentage set in the declaration and may vary with unit size. For example, a unit with a 5% share of a $1,000 monthly budget pays $50 a month.

Because the percentage is set in the declaration, two owners in the same building can pay different amounts if their units differ in size.

Ontario condos are governed in this order: the Condo Act, then the declaration, then the by-laws, then the rules. If they conflict, the Act takes priority.

The reserve fund part of your fees

Owners pay into the reserve fund through their monthly fees. The board decides how much goes to the fund and may need to raise contributions to keep it adequate. The fund may be used only for major repair and replacement of the common elements and assets of the corporation.

Updated reserve fund studies must be done at least every three years after the first study. Ask for the latest one before you buy.

A new condo corporation must complete a Class 1 reserve fund study within the first year after the declaration and description are registered. A study has two parts: a physical analysis of components expected to need major repair or replacement within at least 30 years, and a financial analysis with a funding plan projected over at least 30 consecutive years. A component goes in the inventory only if its replacement cost is at least $500.

The board must review the study within 120 days of receiving it and propose a plan for future funding. Within 15 days of proposing the plan, it must send owners a notice on the prescribed form, the Notice of Future Funding of Reserve Fund.

Costs that sit outside your regular fees

• Special assessments: the board can levy one through common expense fees without owner approval, for reasons such as unforeseen expenses, a major repair that exceeds its budget, or litigation costs. Your share uses the same percentage as your common expense share.
• Chargebacks: a cost the corporation bills to one owner, usually because of that owner's act or omission.
• Your own unit: fixtures, furnishings, equipment and personal property are generally not part of the standard unit, and the corporation's property insurance does not cover them.
• Repairs outside the standard unit definition are the owner's to make.

Owners must pay their share of a special assessment. There is an exception: in a court decision the CAO describes, a buyer was exempt from their share because the corporation's status certificate had not clearly disclosed that assessments might be levied. An unpaid special assessment gives the corporation a lien against the unit.

Owners should strongly consider their own property insurance for upgrades, fixtures, furnishings, equipment and personal property. A corporation's declaration, by-laws or rules may require owners to carry insurance, and then it is mandatory for that building.

If damage is caused by an owner, tenant or resident, the corporation can charge the owner the lesser of the repair cost or the corporation's insurance deductible. Some corporations have by-laws that make owners pay the deductible in more situations, including where no one is directly at fault.

What happens if fees go unpaid

When an owner defaults on common expenses, the corporation automatically has a lien against the unit. The lien covers the unpaid amount, interest, and all reasonable legal costs and collection expenses.

The lien expires three months after the default unless the corporation registers a Certificate of Lien in the Land Registry Office. Before registering, the corporation gives the owner a Notice of Lien, and if the arrears are not paid within 10 days it can register the certificate.

An owner can pay everything secured by the lien at any point until the unit is sold, and the corporation must then discharge the lien. If you are behind on fees, it is worth getting advice early.

What to do next

• Ask for the budget and the most recent reserve fund study summary.
• Request a status certificate, which must be provided within 10 days.
• Check the certificate for arrears, special assessments levied since the current budget and why, and the reserve fund statement.
• Read the declaration for your percentage share and the standard unit definition.
• Ask a lawyer to review the documents if anything is unclear.

Frequently asked questions