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Linda Palfi
CNC Properties
47033 Creekside, Calgary, Alberta
P: 403-998-7732
F: 403-592-8002
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New Act benefits apparent

 

Note: This article was written in 2006, when the benefits of the then-new Condominium Property Act were becoming apparent. Its points remain valid today.  -Linda

 

There was a price to pay, but what a few years can make! Resale condo homes across Alberta have seen a dramatic improvement in maintenance and in capital-reserve funding due to the new Condominium Property Act of the year 2000. Many properties that were previously deteriorating and under-funded are enjoying a rebirth. Buyers still need to exercise diligence, but fewer are buying into poorly-maintained condo communities.

 

The motivation for change was the September, 2000, new condo law that gave all Alberta condo communities two years to implement reserve-fund plans. Suddenly engineers, home inspectors, and condominium consulting firms became very busy evaluating roofs, boilers and other components from Spruce Grove to Lethbridge. Repair and replacement funding plans were laid out, and in a few cases there was music to be faced. Some condo homeowners have had to cough up $1,000 bills, and I know of cases where it amounted to $6,000 per home.

 

As well as those special assessments to fix current problems and to create reserve-fund accounts, in most cases monthly condo fees are higher today and will remain that way, so that when major components need replacement in future, cash will be available to pay the bill. Has it been expensive? Sure. Does it cost somewhat more to own a condo home today than in 1999? In most cases, yup. But today the infamous "cash call" has become the exception rather than the rule. Let the house owner get out his credit card and go into debt when the roof needs replacing. We in condominium homes, on the other hand, will mostly find that our rainy-day fund stands ready with cash to cover the expense.

 

Sadly, the expense has caused a few people to flee condominium living, turning to single-family homes instead. Do they think it will cost less to heat a house than a townhouse or an apartment condo? Do they believe that there are no maintenance costs attached to owning a stand-alone home? Simply put, the costs of home operation and maintenance are unavoidable. You can save up to pay for a new roof, or you can borrow to pay the bill when it comes due. Either way, you pay.

 

There's also a refund that accrues to condo sellers who properly maintain their homes and save up the reserve cash needed for future major projects. The market across Alberta is generously rewarding sellers for good condo homes in well-maintained communities that have adequate or generous reserve-fund savings. Just as a well-maintained house draws a better price upon sale, condo homes obtain appreciated value above the average if maintenance has been done and cash is on hand to replace major components in years to come. Who can argue with the value of leaving behind, say, $4,000 in reserve-fund savings upon sale of a condo home, but having obtained a $10,000 higher sale price.

 

In the case of new or near-new condo homes, there will be no catching up to do. Yet owners should start saving immediately to build their reserve funds, and probably with larger contributions than the developer's budget suggested. When a roof, siding, or a heating boiler needs replacing, or when the condo-specialist Realtor for a condo home buyer asks pointed questions, there's no substitute for having ample money in the condominium corporation's bank account.

 

To keep reserve funds topped up, but also because of higher energy costs, monthly condo fees have risen for most Alberta condominium communities. Here is an updated rule of thumb: it costs 40 cents per square foot per month to run condominium housing. A single-family homeowner can run the house for a nickel less, but he has to cut his own lawn and vacuum his own hallways. If you have a 1,100 square-foot condo apartment, your condo fee will have to be about $440. If you live in a condo townhouse, your monthly contribution might be half that, but you'll pay the difference in water and sewer, natural gas and electrical bills.

 

The new Condo Act sets justifiably higher standards for condo reserve studies and funding. Alberta's condominium corporations have responded well with improved savings for capital projects and generally improved maintenance.  Well done!

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