It is important to understand how a particular condo complex functions, what maintenance fees cover and what funds are set aside in the 'reserve fund' for future expenses. When buying a condo, you are purchasing the unit but also a share of the condo corporation. Reviewing all available documents is essential to reviewing the health (and value) of the complex.
A reserve fund is basically money set aside to cover the costs of budeted expenses over the coming years. A reserve fund study is completed by a 'qualified person' and requested and reviewed by the condo board. There is not a government body that reviews the reserve fund study/plan. The study and plan outline future maintenance items and expected costs and then this is used to determine the maintenance fees. If the reserve fund is not sufficient to cover costs or an unexpected issue arises a special assessment may be issued. For example, a building may encounter a large maintenance issue that was unexpected and not budgeted in the reserve fund. This cost will be divided among the owners based on their share of ownership (unit factor) and a special assesssment will be levied.
Another thing to consider when purchasing a condo are the bylaws which determine how the condo is run and the rules enforced in the complex. If you have a pet, you need to check the bylaws to determine if pets are allowed and any restrictions associated. Condo living comes with some rules so depending on your lifestyle that may be good or inconvenient.
The most important thing in purchasing a condo is to do your homework. The Purchase Contract outlines the list of documents you should receive as part of the purchase. Go through the list and ensure you have everything you need. I highly suggest all of my clients get the condominium documents reviewed by a condo review company. The documents can be confusing and a professional opinion can give you the information you need to make sure you are paying the right price for your new home. Also, don't be surprised if your lender/bank want to review the documents as well. They are often reviewing these documents for purchases with less than 20% down so ensure your contract is well written to protect your interests.
If you are looking for a new condo and you haven't heard the above information from your Realtor or don't have a Realtor, be sure to contact some of the great folks in this city to help you. I am happy to help as well, but most importantly I want you to be well informed so you can feel confident in your decision and purchase of your new home.