Purrfect Properties Blog

Posts Tagged ‘Condominiums and Condo Fees’

When will consumers get the relief they need with Condos in Alberta?

Friday, January 29th, 2016

The Importance of Bill 9

Hi Folks, this was such a great article just posted, that I knew I had to send it out directly.  Estefania, thank you for writing this, you clearly articulate what so many consumers have experienced and are working to correct.  Personally, I am involved with the same issues as written in your article and I hope by this reposting that I help to bring awareness to my community and circles.

http://www.sherwoodparknews.com/2016/01/28/the-importance-of-bill-9

  By Estefania Cortez-Vargas, Special to the Sherwood Park News

Thursday, January 28, 2016 11:00:00 MST PM

Bill 9, the Condominium Property Amendment Act, 2014, was passed in the Alberta legislature in December 2014. Since then, Service Alberta staff have been developing regulations and the Real Estate Council of Alberta (RECA) is developing licensing standards for condominium managers.

Since being elected in May 2015, I have met with many stakeholders and constituents about their concerns and experiences with this legislation. It has been made quite clear that this review is important, as many have felt the impact of the act as it currently stands.

In consultations conducted with owners and buyers, condo boards and organizations, property managers and developers, realtors and lawyers, we heard concerns about the previous government’s handling of this legislation and their stakeholder strategy. In response, we took the unprecedented step of putting draft regulations online for all to see. We received nearly 300 responses to our survey — 75 per cent coming directly from condo owners. These responses indicate broad support for enhancements to protections proposed by these regulations.

The regulations are intended to improve protection for purchasers and existing owners, enhance board transparency and accountability, allow for efficient governance, raise standards in Alberta’s condominium management sector, and enhance dispute resolution.

Regulations are being drafted and will be rolled out in four phases. Phase 1 focuses on developer obligations and enforcement powers. Phase 2; insurance, repair and maintenance obligations, corporation governance and reserve funds. Phase 3 will be conducted by RECA and will address regulation of the condominium management sector. Phase 4 will create a condominium dispute tribunal.

The bill also aims to raise standards in Alberta’s condominium management sector by giving RECA authority to license and regulate managers. RECA is working directly with the condominium management sector and will consult the condominium community at-large, including owners, to determine the appropriate regulatory framework and cost structure.

Our government is committed to strengthening consumer protection, improving consumer confidence and balancing the interests of stakeholders in the condo market. That is why we will continue to take an open, public, and consumer rights-based approach to completing these important regulations.

More regulations are needed to complete Bill 9. I encourage all stakeholders to visit www.servicealberta.gov.ab.ca/Consumer-condominiums.cfm for information and updates, and to provide feedback. I can also be reached directly through my constituency office.

I would like to express my gratitude to those of you who have spent countless hours discussing this matter with me. I will continue to consult with you and look forward to future conversations and input as we move ahead.

Estefania Cortes-Vargas is the Member of the Legislative Assembly for the Strathcona-Sherwood Park Constituency. If you have any comments or questions concerning this column or other provincial government issues, please contact Estefania at her constituency office located at #19 – 99 Wye Rd., Sherwood Park, T8B 1M1. Telephone: 780-416-2492 or e-mail: strathcona.sherwoodpark@assembly.ab.ca.

Further resources about licensed property managers and unlicensed assistants in Alberta.

As of December of 2014, Alberta Legislation passed that all property managers must be licensed with and registered to the Real Estate Council of Alberta. https://www.reca.ca/consumers/standards/condominium-manager-regulation.html

A RECA consumer alert regarding unlicensed property managers: https://www.reca.ca/consumers/publications/news-releases/2015/15-01-19-Schuller-Consumer-Alert.html

‘Consumers are encouraged to work only with licensed industry professionals.

Licensed individuals must meet and maintain rigorous licensing requirements, including:

  • providing a Certified Criminal Record Check prior to licensing
  • completing comprehensive pre-licensing education and ongoing re-licensing education, and,
  • maintaining errors and omissions insurance.

In the event of a licensee’s fraud, breach of trust or failure to account or disburse money in accordance with the terms of trust, a consumer may be eligible for compensation from RECA’s consumer compensation fund. Consumers who work with unlicensed individuals are not eligible for compensation from RECA’s consumer compensation fund.’

Can You Unlock Property Secrets by Looking at its’ Condo Fees?

Wednesday, August 19th, 2015

Hi Folks,

I am often told by buyers that they are frustrated with the purchase process of condominiums in Edmonton, Alberta. You see in Edmonton, a client is generally not granted the opportunity to review condominium documents before the buyers write an offer on the property.

The contracts used for MLS® purchases (not most Builders) is created by the lawyers over at the Alberta Real Estate Association and included in a Residential Condominium Property purchase contract is a condition of satisfaction with the condo documents. This is great; as a consumer, you need to know how well the property is being managed and how much money it has in the bank.

You will most likely be waiting for a few days after you negotiated with the Sellers and reached final acceptance before you receive the condo documents. The Sellers will have to request a copy of the documents from the property management group and they will take some time to produce the results.  Even a rush job can lead onto to a week or more, especially in straightening out everything that is needed for the buyer to make an informed decision.  A part of the reason that the Sellers aren’t asked to provide the documents before the offer comes in, is the cost.  To get all the documents necessary, it could cost the Sellers up to 600 dollars and that may not even include a rush service.  Another reason is tied to the information statement which needs to be current to the month that you have written your offer; and that makes it nearly impossible to do ahead of time. (See Sellers Note 1 at the bottom of this post.)

So how do you make an informed decision quickly?

Real Estate is a quick industry and the best homes at the best prices always go right away.  So how do you beat the rest of the public to a smart decision about that particular property and move onto the next one, while maximizing your time spent looking?

Simply put; look at the amount of the condo fees.

High Condo Fees in Edmonton

All Condo are not created equally, you could have a 1000 ft2, 2014 built, apartment styled condominium with condo fees of $175 per month no utilities included.  You could also have a 1000ft2, 1976 built, apartment styled condominium with condo fees of more than $1,100 per month condo fees. What makes the difference in the fees is if; utilities are included, what kind of building it is, how much maintenance costs for that building and the historical as well as professional management of the property.

If those condo fees are high, you can bet they have had to raise the fees to offset future repair and replacement costs.  Sometimes the condo fees get so high they are just as much as your mortgage.  If the condo fees get that high, you will need to be earning a fairly good wage as condo fees are considered a part of debt to the Financer and you will need to be able to cover this cost, plus your mortgage and still have a significant portion of your wages left over for things other than housing.

What is considered High Condo Fees?

Yikes, this is a tough question.  Like I noted earlier, it depends on what is included in your condo fees.  I’m going to talk generals or averages here. 1000 ft2 apartment style – low rise, 2000+ build, with heat, water and power included – maybe $550 per month. Same type of property, no utilities included; maybe $250. 1000 ft2 apartment style – high rise, 1970+ build, with heat, water and power included – maybe $900+ per month. Your 2 storey townhouse condos also known as row housing; probably won’t have utilities included and those condo fees fall in ‘normal’ ranges of $200-$275.  You should know though, that these averages do not include Bare Land Condos.  This is a different type of condominium structure and less exterior maintenance is paid for by the corporation.  It is a type of condominium where you own the land the property is on; not just have exclusive use of it.

So check out those condo fees and use your smarts or your REALTORS® help for knowing if it is even going to look at in the first place. Save yourself time, money and frustration. Not every condo is a welcome choice.

If you are thinking about buying a condo and would like a valuable, subject matter expert on your side; I hope you will give me a call. I’d like the opportunity to help you make an informed decision for your home purchase in Edmonton.  I consider this as one of the ways in …

How to save thousands on your next home in Edmonton. Now that’s the Cats’ Meow.

SELLERS NOTE 1: If you are a Seller, I suggest leaving the Information and financial statements to when you have a negotiated offer in place and ordering the by-laws, property management agreement, full reserve fund study, reserve fund plan, reserve fund study, annual general meeting minutes and the budget when you list your home for sale.

If it Looks Like an Under Priced Condo, Beware of Looming Assessments!

Wednesday, August 5th, 2015

Hi Folks,

You might be looking at buying a condo these days.  They are an affordable option for many reasons; perhaps you plan to be sailing your boat in another country while you’re in retirement and you don’t want to have to cut the lawn or shovel the snow.  Perhaps you’re new to home ownership, and your funds are limited to the townhouse range of condos.  In any case that you might find yourself in, if you live in Edmonton, you’ve recently heard of the outrage surrounding Oliver Gardens Condominiums and the $56,000 special assessment each owner in the building was issued.This month, I had a very affordable, built in the 90’s condo recently go up for sale, and it sold in 10 days.  That’s it, 10 days. It was listed for $147,000.  It was one of the Savills Condos over by NAIT on 118th ave and 101 Street. I got quite a few calls from the public, wondering about this condo and if it has any special assessments on it.  Thanks CTV and Global, no special assessments or levies here.  The condo fees were reasonable at $308 per month, adjusted last year to make up for a projected shortfall in the future.

Edmonton Special Assessments

Special Assessments for Condos in Edmonton

Condo fees go to the management and operation of the condo and some of your condo fees go into the Reserve Fund.  The Reserve Fund is meant to cover future expenses on the property.  Sometimes though, there just isn’t enough money. Too much maintenance at the end of the money.

A Reserve Fund Study is prepared…

You see, the rules are that every five years a condo board has to have a reserve fund study completed on its’ property. Thanks to the Government, years ago, it was decided that condo corporations were being run into the ground,too many sellers were being foreclosed upon and properties were being under-maintained and under-managed.  So the powers that be decided Reserve Funds were the answer, and to re-visit those reserve fund studies every five years, with a commence-able action plan as a result of the study.

A certified personnel member (hopefully an Engineer) of an accredited organization with a permit to practice will come out and perform a review of all the elements in the property.  Everything from roof top units to parking paint lines is reviewed for deterioration as well as remaining age and assigned a remaining life expectancy.

A Reserve Fund Plan is created…

The results are cross referenced to the expected amount in the reserve fund and both charts are placed together to compare results and see if there will be enough money in the reserve fund when the time is necessary.  These Reserve Plans can be made for 5,10,15,20,25 or even 30 years into the future.

Sometimes, it is easy to cover the shortfall over a large number of years, and a condo board may opt to choose a recommended plan that only increases the condo fees by a small percentage.  Perhaps the fees are increased gradually over a number of years.  Though the worst is that sometimes, a special assessment is needed to cover major repairs that are immediately necessary.  Special assessments are generally not approved just to put money in the bank and gain interest.  I have seen special assessments as low as $200, and I have heard of special assessments at $90,000 here in Edmonton.

Some board OPT and VOTE NOT to complete these studies and surveys because they don’t have the money or feel it is a waste of the owners’ resources.  I’m not sure why they get away with it for so very long; however I have seen with my own eyes, a condo corporation that has not done a reserve fund study for 20 years.

The Vote is Cast by Your Board Members…

That’s right, your friendly neighbours on your Condo Board voted which way to go, how much the special assessment was going to be (within the confines of the Condo By-laws) and out went your notice in the mail.  It will be nearly impossible for you to get a loan to cover the assessment from the banks, unless you can pull some money out of a line of credit, etc.  Hopefully if that doesn’t work, you’ve got enough equity built in the property to sell, cover REALTOR costs and pay off the special assessment.  You will need to as the contract states the Seller is responsible for all special assessments up to the closing date.  If not, the next options aren’t going to get any more pretty.

In the end, it is up to you, BUYER BEWARE.  READ your Condo documents. The Savills Condos turned out okay, but they don’t all go so jolly.

Often when I am showing condos to my clients, I will find someone in the hallways and ask them if they live in the property, for how long, if they have any problems with the condo board, if repairs are coming up on the building and what the reserve fund is it.

Whether it is a high number or low, 99% of the people I run into can’t tell me what’s going on with the maintenance of their building or where the reserve fund is it.  Why they don’t know is foreign to me.  In fact the last woman I ran into, who had lived at her home for under a month responded with:

“Oh I don’t know, all those documents are still with my Lawyer.”

The best part, when we got to the main floor, the Reserve fund amount of $825,000 which is awesome (Go Carrington build, Promenade Eaux Claires) was posted on the Condominium board, right outside the elevator.

Let your Lawyer rad your documents, sure.  Let your Lawyer give their advice to you about the future of the property.  Get your REALTOR to help you.  I know I can’t sleep at night unless my client is making a solid investment that I CAN COUNT on.  Just read those documents for yourself folks, know what’s going on, be involved, be a board member, send your proxies to the meetings and remember, even one voice can make a difference.

How to save thousands on your next home.