Who pays to fix structural problems in a condo?

A lot of boomers want a carefree lifestyle where they can lock the door when they travel and not have to worry about shovelling snow or leaky roofs. At the other end of the spectrum are first-time buyers. They don’t mind painting and decorating, but they can’t really afford a fixer-upper and a detached home is out of reach.

For both groups, condos can look like a great solution. After all, any structural problems that come up will be looked after by the condo corporation, right? A condo owner can pay their monthly condo fees and not have to worry about anything. Well, often that’s true. But sometimes it’s not.

I recently took  a young  couple to see a condo row unit with very low condo fees. It was obvious that the windows were old and needed replacing. I emailed the listing realtor to see if the condo fees would go up to cover the cost. I discovered that the entire exterior of the condo –siding, roof, foundation, everything– was the owner’s responsibility. The condo corporation only took care of the driveway, front lawn maintenance (but not the back yards), and water. No wonder the condo fees were so low!

This kind of property is sometimes referred to as a “freehold condo,” which is actually a misnomer.  “Freehold” is technical legal term that refers to the interest held in land, as distinct from “leasehold.” All condo units are freehold, in the sense that the person owning them owns the largest interest possible as well as a share of the common elements. 

Under the Condominium Act, a “freehold condominium corporation” simply means that the condo corporation owned the land it developed, whereas  a “leasehold condominium corporation” means it built on leased land. 

But the term “freehold condo” doesn’t appear in the Act. And so when you see it being used in a listing, it doesn’t really tell you what’s part of the unit (and therefore the owner’s responsibility) and what isn’t. Sometimes it means that the back yard is included, or the front yard, or the entire structure,  but there’s no way of knowing, because it isn’t used consistently. 

The only way to know for sure what the condo corporation is responsible for, and what’s left to the owners to deal with,  is to have your lawyer look at the documents that created the condo corporation. The Declaration establishes whether it’s the unit owners or the corporation that’s responsible for repairing and maintaining the units and common elements. The Description means the survey drawings. These show which parts of the condominium complex are units and which are common elements. 

Sometimes what you find out is surprising.  For example, I took my prospective buyers to see another condo row unit. In that one, the roof, foundation, and siding were all common elements, meaning the condo corporation would look after them. I would have assumed the windows would be looked after by the condo corporation too, but they weren’t–the unit owners have to replace and maintain their own.

The condo my clients eventually bought requires them to fix the roof and replace windows and exterior elements  but the condo corporation will deal with any foundation issues. So it really is mix-and-match.

Now even when structural elements are common elements, that doesn’t mean you don’t pay anything towards fixing them up. A portion of your monthly condo fees is placed in a reserve fund. The condominium’s status certificate will indicate how healthy that reserve fund is and what major repairs are planned or underway. 

If the reserve fund isn’t large enough to cover repairs when they’re needed, either your condo fees will go up or you will be charged a special assessment. And quite a few condo owners have been gobsmacked by huge special assessments that landed without any warning. 

I had  clients last year who were very interested in a gorgeous condo  near the Canal until we discovered there was going to be a whopping special assessment – roughly $20,000 per unit— due and payable that summer.  As much as they liked the building, not surprisingly, my clients decided to look elsewhere. 

Unfortunately, large special assessments are not all that rare, particularly as buildings age but it can happen in newer buildings too. I know of one built in the late 90s where the sewage pipes were made of substandard material and had to be entirely removed.

So overall, do make sure you know what you’re getting, and getting into, before you buy. Talk to your realtor and your lawyer, and don’t assume anything. It helps to be careful if you want to be carefree.

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