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Linda Palfi
CNC Properties
Box 47033 Creekside, Calgary, Alberta
P: 403-998-7732
F: 403-592-8002

New Condo Act is now phased in


Note: This article was written in 2003.  -Linda


The phase-in of Alberta's new Condominium Property Act wrapped up on September 1, 2002, serving condo buyers and current owners in several ways. First, buyers of new or rental-conversion condominiums have expanded rights of disclosure. Second, all existing condominium corporations should have a capital-needs analysis complete on their common property (usually called a "reserve fund study"), and a funding plan in place to pay for the projected capital expenses. Third, all exterior windows and doors are common property, unless a special resolution of owners successfully designated them the property of each homeowner.


Let's go through these three headings. When buying new condo homes, the new Act and its regulations specify a package of disclosure that the builder must provide to the purchaser. These include the basis for the unit factors that allocate budget expenses, most details of the development plan (number of buildings, height, finishings, location of major utility services), whether the project is phased and how it will be run when all phases are complete. There are also extensive provisions for holding buyers' money in trust, and the very reasonable requirement that the property have an occupancy permit, so we don't move into incomplete buildings.


Next, most existing condo corporations have met the deadline to complete their assessment of common components, such as roofs, exterior cladding, all mechanical systems and in-ground services. They'll have had a professional survey all components, project their remaining life and the future cost to replace them. There will be a spreadsheet of those future costs, and of the funding needed to pay for it all; the "rainy day" fund.


Some corporations, of course, missed the deadline. While there is no "condo cop" in Alberta to enforce provisions of the Act, other factors will. First, the national housing agency, CMHC, may stop insuring mortgages for purchasers into condominium communities with no reserve fund plan. When owners can't sell, they'll be demanding quick completion of the reserve fund study. As well, the projected needs must be "funded", in that the current reserve account cash, plus projected future contributions, will reasonably cover the expenses to replace equipment and components as they wear out.


The law allows planning for a "special assessment" on owners in a future year to fund a shortfall from condo fee revenue. But if that's the plan, then at least current owners and prospective purchasers know that's what they should expect. And standards will vary widely among condominium communities. While a luxury apartment condo building might plan to replace pavement when it's cracked, a more modest condo building's board might live with deteriorating pavement for years, extending its life, and deferring capital costs.


Finally, in both new and existing condominium developments, exterior windows and doors are deemed to be common property unless the condominium plan was amended during these past two years to confirm a bylaw provision that said they are unit-owner responsibility.


This issue can be hard to fathom, but examples will illustrate. If you're buying new, you will know that a future broken double-pane window seal will not be your job or expense to repair personally, but that of your condo corporation. If you're buying an older resale condo, the issue looms even larger. In some older townhouse developments, many people upgraded their own windows and doors over the decades, so they opted out of paying to replace yours. You need to know if the numerous windows needing replacement are your personal cost, or funded through the reserve account.


Although some of this is Greek for many condo owners and shoppers, the new Act offers increased disclosure, expanded consumer protection, and mechanisms for even better condominium maintenance and operation. Remember that most builders will pay the cost of a Realtor to assist with your purchase, which, by the way, also provides you with the Realtor's errors and omissions insurance. On the resale side, organized real estate, such as all properties listed on the Multiple Listing Service ("MLS"), see the seller pay for you to have a condominium-educated Realtor act as your agent for the purchase.


Otherwise, there are condominium consulting companies that, for a few hundred dollars, will analyse your proposed purchase and advise you of any potential issues. Whether Realtor or consultant, talk to these people before you shop. You deserve the full benefit of Act provisions that are fully phased in, and are in place to ensure you enjoy peaceful and secure condominium living.

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