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Wednesday, 28 August 2013

Before you buy, be sure you understand – and can afford - your condo fees

By Todd Fryer

Condominium maintenance fees are a monthly charge the owner of a unit must pay to cover the costs of items such as building insurance, upkeep, repairs to common areas including the grounds, the heating and cooling system, water and sewer pipes and property taxes. A portion of those monthly fees are also set aside and put in a reserve fund, or rainy day savings account, for future expenses like a new roof or furnace.  
In Ontario, when you buy a condo, your maintenance fee is predetermined by the developer and is outlined in the Schedule of Declaration. Based on the size of each unit, a percentage of the common expenses is allocated to each unit so that the sum of the whole adds up to 100 per cent. 
A budget is then drawn describing and adding up all expenditures that the condo corporation will incur for a year. Each suite is then assessed its annual proportion of these expenditures. For example, if your annual fee is determined to be $2,000 a year, that’s $166.67 to be paid on the first of every month.
If the budget does not change, the maintenance fee stays the same. But if costs increase by two per cent then all owners’ fees will increase by two per cent.
Special assessments could also drive up maintenance fees. It’s an additional payment a condo board imposes on unit owners when there’s an unexpected shortfall or expense to be covered and there’s not enough in the savings to pay the bill. For example, a flood in the basement or wind damage to the grounds could prompt the extra payment. Just like monthly maintenance fees, condo owners must pay special assessments. Owners can’t vote on whether or not to levy that assessment.
Like maintenance fees, special assessments are proportional.  A smaller suite will pay less than a larger one. 
In Ontario, special assessments are more commonly enacted in condos built before 2001, when the Condo Act didn’t enforce boards to do reserve fund studies, which, like a home inspection, roots out potential problems in the future and ensures there’s enough money saved to cover those costs.
Before you purchase a condo, be sure you know how much you will have to pay in condo fees. Your realtor and lawyer will help you decide if the fees are reasonable and if the condo fund appears to be managed properly.

Any questions give me a call
Todd Fryer
Century21 Aberwin Realty
905 869-3473

Monday, 26 August 2013

Pros and cons of buying a condo before it’s built

By Todd Fryer:

There are several pros and cons to buying a condo before its foundation is poured or during construction. Here is a list to help you decide the best way for you to go:
  • You can customize your unit and make it your own.
  • Buying early in the development is generally the time when prices are the lowest. Typically they appreciate over time. 
  • You only have to put down a 15-20 per cent deposit on the market value and when you sell, you reap 100 per cent of the value. 
  • More time to save or downsize while the project is under construction. 
  • A longer closing period means more time to save for the downpayment.
  • Lower maintenance fees. Buying new means the monthly maintenance fee will likely stay the same as the day construction was completed and remain so for about 10 years. 
  • On the investment front, your money is tied up for a few years until it's built - with no return on that until you sell and hopefully the value has appreciated by then.
  • You’ve paid out cash for an intangible, something that’s a floor plan layout and artist renderings.  
  • Potential delays in completion. Time delays can occur due to weather, labour shortages, supplier problems, inspection problems, etc.
  • Layout plans may alter without you having any say in it, as the developer has the right to do so. The hefty sales contract is riddled with phrases like “more or less” and “subject to change without notice,” giving the developer free reign to change the plans on which you initially signed.
  • The market may change by the completion date bringing a drop in market value and interest rates may rise or your personal situation may change that would make condo life less appealing. 
  • There may be additional costs on closing.
  • When you finally get the keys to your condo you don’t own it, yet, until the building is registered, and that could take up to a year. Meantime, you have to pay an occupancy fee to the developer. It’s much like paying rent on a condo you own.
Before you buy, make sure you’ve weighed all of the pros and cons of buying a condo on spec so that when you’re ready to move in years later, you love the place and have made a wise investment.

Any questions give me a call
Todd Fryer
Century21 Aberwin Realty
905 869-3473

Monday, 12 August 2013

Understand what your home insurance policy covers before disaster strikes

Understand what your home insurance policy covers before disaster strikes

The June flooding in Alberta and Toronto’s recent 100+mm rainfall in a single day has people worried about how record rainfall, flooding and sewer backups will affect them in the future. Many homeowners are wondering if their home insurance policies will cover such damage.
There are many causes of home flooding and it’s important to know what your home policy covers. It’s also important to understand the difference between the insurance distinctions between water damage and flooding. 
Simple water damage due to common flooding, such as burst pipes, a leak in your roof or a broken water heater, are usually covered. Some policies may have additional coverage, for an additional fee, for sewer backups and the corresponding cleanup. This is especially important due to the contamination and mould issues that are hand-in-hand with this type of damage.
On the other hand, overland flooding, such as that from excessive rainfall, is very likely not covered under a standard policy. 
Some water damage extension policies may cover a range of expenses in an official flood. Additional living expenses if you’re forced to flee your home and even spoiled food in the fridge and freezer from power outages can be covered in these extension policies.
Review your homeowner’s policy and discuss your coverage in detail with your broker. Be aware that if you are in a high-risk area, such as on a flood plain or near a lake or river, you will pay much higher premiums and corresponding deductibles. Some Toronto residents are discovering that they are not covered, or that their deductibles are too high to make claims worthwhile, so review your policy thoroughly and make any necessary revisions.
As with so many things with homeownership, it’s important to read your documentation carefully and discuss policies with your representative long before you may need to make a claim.
Any questions give me a call
Todd Fryer
Century21 Aberwin Realty
905 869-3473