Condominium living and investing is a popular option for many Canadian as it can be a relatively carefreehousing and real estate investment option. Currently, in major cities in Canada, one out of three new homes built is a condominium. Interest in condominiums tends to grow with a shortage of rental accommodation, relatively low mortgage interest rates, and urban core renewal. New Real Estate investors intend to buy condos to start investing, since there is very little care required say Navtaj Chandhoke, founder of Professional Real Estate Investors Group (PREIG) Canada and Most major newspapers, Real Estate websites now include a condominium section which recognizes the increasing number of people who already live in”or aspire to live in”a condominium.
Residential condominiums can be high-rise or low-rise (under four storey), town or row houses, duplexes (one unit over another), triplexes (stack of three units), single-detached houses, stacked townhouses or freehold plots. There are even mixed-use condominiums that are partly residential and partly commercial buildings. They come in various sizes with diverse features and they can be found in almost every price range.
A condominium is a form of home ownership in which individual units of a larger complex are sold, not rented. These units may be renovated apartments, townhouses or even commercial warehouses says Navtaj Chandhoke. Contrary to popular belief, the word 'condominium' does not apply to the type of unit itself, but the legal ownership arrangement. Any multi-unit structure can 'go condominium', meaning occupants must either vacate the premises or purchase their apartments outright.
Those who purchase units in a condominium technically own everything from their walls inward. All of the individual condo owners have shared rights to most common areas, such as the elevators, hallways, pools and club houses. Maintenance of these areas becomes the responsibility of a condominium association. Every condo owner owns a share of interest in the condominium association, plus an obligation to pay monthly dues or special assessment fees for larger maintenance problems.
Administrator: In situations of an administrative vacuum or irresolvable conflict, a Condominium Corporation or any interested person may apply to the Court for appointment of an administrator. If appointed, the administrator will have, to the exclusion of the board, all the powers and duties that the Court may order.
Annual budget: Now required by the Condominium Property Act, conscientious development of an annual budget is an important duty of a condominium board. It the basis upon which contributions are levied and funds collected for the control, maintenance, and repair of the common property and the administration of the condominium corporation.
Annual general meetings (AGM): Once a year, within 15 months of the last, a condominium board is required to convene an Annual General Meeting of unit owners. At the meeting, the retiring board provides owners with operational and financial reports for the year past. Owners then elect a new board, and deal with any unfinished and new business, including (if required) appointment of auditors.
Bareland condominium: In traditional condominium, both the master lot and the walls and roof of buildings are common property. Today, many townhouse and villa communities are developed as bare land condominiums in which the private structures lie completely within the unit boundaries, and only the land is condominiumized.
Board of directors: Every condominium must have an elected executive, the Board, which is responsible for proper administration of the condominium and bylaw enforcement. The Condominium Property Act initial Appendix 1 bylaws, although replaceable, stipulate a board of no fewer than three (except where there are not more than two owners) and not more than seven individuals.
Bylaws: A set of rules and procedures, adopted by a special resolution of unit-owners, for the administration of the condominium corporation and the management and conservation of the common property. Initial bylaws for all new plans are provided in Appendix 1 of the Condominium Property Act, but are most times replaced by the developer with a project-specific set.
Caveat: A unit-owner obligation to pay regular condominium fees or special assessments is fundamental to the condominium financial security. If a delinquency develops, the corporation has the right to file a caveat (notice or warning) against the title. The charge may be enforced in the same manner as a mortgage.
Condominium Corporation: When a plan is deposited with a land titles office, an administrative body is automatically created. Membership in the condominium corporation is made up of the owners of the individual units. Its purpose is the management of the affairs of the condominium in the best interests of all owners.
Condominium plan: Every condominium community has a plan, registered at a land titles office that provides unambiguous definition of the perimeter of the master lot, the location of buildings (if any), unit boundaries, and the unit-factor distribution. The document replaces the original single title with unit titles.
Common property: Every part of a condominium plan that is not a unit is common property. The condominium common property supports and services the individual units, and its ownership is proportionately distributed among the unit owners in accordance with their unit factors.
Condominium Property Act: The name of the Alberta statute that supports, directs, and regulates condominium ownership. Since provinces have jurisdiction over land titles, each has its own condominium legislation. Fundamental concepts are essentially similar. However, from one province to another, legislative scope and administrative technicalities may vary significantly. The Act, which must be passed into law by the provincial legislature, articulates legislative concepts and cornerstone provisions.
Condominium Property Act Regulation: The Regulation is a set of implementation rules, the scope of which is articulated in the Condominium Property Act, and for which creation authority is vested in the Ministry responsible for its administration. With the legislative revisions in September 2000, the role of the regulations was significantly expanded to the point where they comprise almost 40% of the size of the Act and Regulation combined.
Condominium unit: Units are those parts of a condominium master lot which are designated for the private, exclusive use of individual owners. These volume tric spaces, whether structure-defined compartments of air (as in the case of apartments and traditional townhouses), or columns of air (as in bareland projects), are defined by boundaries shown on the condominium plan.
Contributions (condo fees): Condominium owners contribute to a fund for payment of common property costs (whether normal operating, reserve, or special) via assessments levied against their units.Contributions is the proper term, but â€œcondo feeâ€ has acquired colloquial, although incorrect, currency.
Disclosure documents: Developers of new and conversion condominium are required to provide prospective purchasers with extensive documentation regarding investment details and due-diligence estimates of operating costs. The Condominium Property Act legislates a 10-day rescission period for review and acceptance of these documents. Although time delays for review may vary, member boards of the Alberta Real Estate Association follow similar procedures for resale documentation.
Emphyteusis This term can refer both to a type of contract, an emphyteutic lease and to the right granted under an emphyteutic lease, emphyteusis. Under an emphyteutic lease, a property is leased to a tenant for a period of not less than nine (9) years and not more than ninety-nine (99) years. The lease will specify the annual rent to be paid, and will require the tenant to improve the property by doing things such as constructing and improving upon buildings. During the term of the lease, the tenant has the right to transfer the property to another party and to mortgage the property. At the end of the lease the tenant must return the property to the landlord in good condition. Any improvements made to the property will be owned by the landlord. This type of lease can be used in the development of commercial property or other forms of land development.
Estoppel Certificate: In the context of condominium, its a certificate issued by a condominium corporation stating the status of a particular units contribution account. If the corporation certifies that there are no arrears, referred to as a clear certificate, it cannot subsequently claim otherwise against a new owner.
Exclusive use: Although forming part of the common property, patios, balconies, parking, storage and other spaces are normally designated as exclusive-use areas for residents of a particular unit only. However, bylaws usually provide the board with authority to manage such assignment. Any presumed or represented tenure, permanent or long-term, should be verified and documented.
Extraordinary general meetings: Other than the Annual General Meeting, every properly constituted assembly of unit owners is called an Extraordinary General Meeting. bylaws typically permit the board to call, whenever it sees fit, or give a certain proportion of owners power to requisition, within procedural guidelines, an EGM. The purpose, usually, is to deal with issues that require urgent attention.
Improper conduct: For non-compliance with the Act, the regulations, or bylaws by any party owner, board member, employee, corporation, or developer ” the September 2000 revisions provide that any interested party may apply to the Court for relief from and remedy of this alleged improper conduct.
Insurance corporation: Every condominium corporation must place and maintain a master policy (for a broad set of perils specified in the Regulation)over the common property and the units (other than improvements made by the owners) and against corporation, board and officer liability for action or omission with respect to carrying out their functions.
Insurance unit owner: To protect against property loss, personal liability and disaster expenses, every condominium owner should purchase unit-owner insurance. Such coverage usually offers all-risks protection against an owners personal property loss from fire, theft and vandalism, and improvement and betterment coverage for damage to upgrades made by the owner.
Mortgages unit: Buying and financing a new or used condominium residence is not much different from that of a non-condominium home. Like any home purchase, ownership of a condominium unit plus its proportionate share in the common property is an estate in land. Land Titles will issue a title and register mortgage documents and other instruments associated with standard real estate investments.
Municipal taxes: Like traditional-house buyers, condominium purchasers are land owners. So, they must pay their fair share of municipal taxes. For assessment purposes, each unit and its share in the common property constitutes a separate parcel of land and improvements.
Non-compliance sanctions: Corporations may, with the authority of a properly constituted bylaw, impose monetary and other sanctions on owners, tenants, and invitees of the owners or tenants, who fail to abide by the bylaws. Any such bylaw must define the sanctions to be imposed and the applicable amount or range of monetary sanctions. Boards pursuing such actions are subject to the honesty and good faith obligations and the improper conduct provisions of the Act.
Officers: From its members, the Board elects an executive usually a president, a vice-president, a secretary and a treasurer. The president chairs meetings and often has a casting vote. The vice-president performs the presidents duties in his or her absence. The secretary ensures minutes of proceedings are kept; and the treasurer, that proper financial records are maintained.
Proxy: Written authorization given by a unit owner to another so that person can act for the owner and exercise the unit voting share at a general meeting.
Qualified person: Every board must retain a qualified person to perform the reserve fund study. The person who carries out the study must prepare and submit to the board a written Reserve Fund Report in respect of the study. For communities of not more than 12 units, the corporation may itself carry out the functions of the qualified person if authorized to do so by a special resolution.
Reserve fund: A fund of money set aside to provide for the repair and replacement of major parts of the common property. Officially termed the Capital Replacement Reserve Fund, it is usually held in secure, fairly liquid investments, and is not intended to be used to cover regular or annually recurring maintenance.
Reserve fund study: The purpose of a reserve fund study is to inventory the depreciating common and corporate property needing to be repaired or replaced within the next 25 years, assess the present condition, estimate when each component of the depreciating property will need to be repaired or replaced, and estimate the costs of repairs to and replacement of the depreciating property.
Reserve fund report: Once completed, the person who carried out the Reserve Fund Study must prepare and submit to the Board a written report setting out the qualifications and independence of that person, the findings of the study, and any other matters that are considered relevant.
Reserve fund plan: The condominium board must, after receiving and reviewing the reserve fund report, approve a reserve fund plan under which a reserve fund is to be established, if one has not already been established, and set forth the method of and amounts needed for funding and maintaining the fund. The corporation must provide the owners with copies of the approved reserve fund plan prior to the collection of any funds.
Special Resolution: Important community decisions such as enacting or amending bylaws, or transferring or leasing common property, require a resolution passed at a properly convened general meeting by a majority of not less than 75 per cent of all persons entitled to vote and representing not less than 75 per cent of the total unit factors for all units. Alternately, without a meeting, unit owners representing the same majorities may agree in writing to the special resolution.
Special assessment: If sizeable repair or replacement expenditures are urgently required, and sufficient funds are not available in the reserve fund, the condominium board has little choice but to levy a special assessment. As would be the case with traditional houses, unit owners are required to come up with the cash necessary to rectify the problem.
Tenancy in common: Condominium unit-owners collectively co-own the common property as tenants in common. The arrangement is a long established, business-like system for administering undivided interests in real property. In the absence of a written co-ownership agreement, common law provides for the accounting, allocation, and collection of operating expenses, and for the reimbursement of expenditures that result in capital enhancement. With condominium, the plan and the bylaws constitute a contract between the individual unit owners and the condominium corporation.
Unit: Home sweet home. The unit is the area that you actually own and hold title to. Repair
And upkeep of the unit is generally your responsibility.
Unit factor: Unit Factor is the term used in the Alberta Condominium Property Act to define each unit owner tenancy-in-common share in the common property. Unlike other jurisdictions, where a separate factor regulates distribution of operating costs, the unit factor also determines the proportionate contribution obligation (condo fees). However, the September 2000 revisions now permit, through a properly passed bylaw, assessment proportions other than by unit factor.
Unit boundaries: The Condominium Property Act determines, unless stipulated in the plan, where boundaries exist between units, and the common property. The revised legislation now distinguishes between interior and external doors.
Unit rentals: The Condominium Property Act recognizes that when an owner leases a unit, he or she is also leasing access to and use of the common property. Consequently, the condominium community is given authority to assure that its interests are considered and properly protected. The Act states that an owner shall not rent a unit until written notice of such intent, an address for service, and the amount of rent to be charged is given to the corporation.
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