While monthly condominium contributions can vary widely for a number of reasons, a rule of thumb can easily be calculated for what it costs to operate homes in a cold climate, be they houses, townhouses or apartments. Add up the water/sewer bill, heating and other energy-related costs, insurance, maintenance, and some saving towards future capital work, and I suggest you’ll arrive at approximately 40 cents per square foot.
Sure, some house owners will claim that their costs are lower, but they’re not, really. The house owner just doesn’t save for the new roof needed next year and new furnace that is due in five years, as we do who live in apartment and townhouse condo homes. Nor does he pay someone else to cut the lawn, yet he incurs expenses in time, ownership of a lawnmower and even for its operating costs. In short, unless a homeowner has volunteers doing the gardening, performing the maintenance, and receives natural gas for free, the house owner’s and the condo homeowner’s operating costs are the same and are unavoidable.
In an example, then, a condo apartment of 1,000 square feet X 40 cents per square foot will need to pay about $400 per month in condo contributions, which are mistakenly but commonly called “fees”. There is no third party involved in condominium, of course, so there are no “fees” but simply our contributions to our shared expenses. Monthly contributions less than that may indicate a building that is inadequately funding its operations or its contributions to the reserve fund for future capital works, such as a new roof or heating boiler.
A building with higher contributions than 40 cents/foot may indicate a higher standard of maintenance, some additional service or function ranging from a concierge to a swimming pool, or the contributions include in-suite electricity use, cable TV service or internet service. It may also be an older building spending a little more on maintenance. Smaller buildings sometimes pay a bit more in common expenses because there are fewer owners to carry each cost. Buildings housing 30 suites or 300 suites, for example, might have the same-sized lawn to maintain, the same lobby to clean, or even the same-sized roof area above them, in which case the 300 homeowners enjoy efficiency of scale.
In townhouses the monthly condo contributions are usually lower than for apartment condominiums because utility expenses are paid directly by each townhouse owner. Townhouses usually have their own furnace, hot water heater and individual water meters, so with these utility expenses removed from the condo contributions the remaining condo contribution might be only 20 or 25 cents per square foot per month.
Condo contributions can also be lower in some townhouse and apartment condo buildings because some developments have made the individual homeowners responsible for their exterior windows and doors, so the collective reserve fund does not need to save up to maintain and eventually replace those. Yet lower condo contributions are no saving if you have to shell out $3,000 personally next year for a new set of patio doors. Either way we as homeowners pay these expenses, but we should be aware of how these costs are covered to avoid a surprise expense in the future.
Dramatically higher fees than my rule-of-thumb 40 cents per square foot can indicate that a condo Board did not levy a one-time assessment to fund a major project such as that new roof or replacement of the heating boilers. Instead the Board raised contributions, say, $100 per month per suite for a year or two to pay the bill. While common, this is not an approach I encourage, as the higher monthly contribution scares potential buyers, so it’s not fair to owners who need to sell during that time. It’s better to stick close to the current 40 or perhaps 45 cents per square foot average, and to levy a special assessment if additional cash is needed to pay for a big-ticket item.
Lastly, some condominium developments reduce their monthly expenses a bit by managing the property themselves. This is no undertaking for the timid in larger buildings, but if you own a suite in a four-plex townhouse condominium you’re not going to hire a management firm to run your bank account and pay the bills. In condo buildings of 10 or perhaps up to 40 homes, though, “self management” is an option, saves $20 or $25 per month per suite in management expense, but puts a burden on owners who are on the Board, so consider paying at least the Chair for his or her work.
The days of bias against condominium homes because of monthly condo contributions are over. Homeowners understand that ALL homes cost money to operate and to maintain well. Those expenses can be tweaked, be apportioned differently, be paid up front or deferred until they’re larger, but they cannot be avoided.
Calgary Condominium Directory
