Choosing to live in a condo means not having to do certain maintenance tasks like mowing the lawn, removing snow from the driveway, and landscaping the grounds—in other words, it’s true joy! That being said, several things still need to be considered to have absolute peace of mind, such as condo fees. Here are some tips from our expert that can certainly provide you with insight when purchasing your condo.
You finally purchase your dream condo, but one day, there is sewer backup on the ground floor. The repairs cost $50,000, but the syndicate’s insurance policy only covers $30,000 in damages for sewer backup. The syndicate tells you that you must pay a prorated amount with the other co-owners to make up the remaining cost. The situation shocks you since you never thought you would have to pay out of pocket for damages. You had chosen to buy a condo for peace of mind. How can this type of situation be avoided?
1. Ask for a copy of the declaration of co-ownership.
According to a CondoLegal factsheet, a “declaration of co-ownership is a convention that organizes and regulates the collective life of the co-owners and occupants of the building. This [c]onvention defines in particular their rights and obligations.”
2. Ask how much the condo fees are.
In the short term, condo fees are used in many ways, including to maintain the building (changing lights, snow removal, landscaping, etc.). That being said, they mainly serve, in the long term, as a way to plan for unforeseen costs. Don’t look to pay the lowest condo fees possible.
3. Check if the reserve fund is sufficient to cover unforeseen costs.
The reserve fund serves as financial support for co-owners for repairs or major disasters. However, if the fund is not sufficient, each co-owner must pay to make up the remainder.
4. Take a look at the insurance policy held by the syndicate of co-owners.
By checking the insurance policy of the syndicate to determine what coverage is included, you will be able to offset any deficiencies with your own insurance. You will thus be able to add coverage to your policy to ensure that you are well protected and covered in the event of a claim. Here are some examples of coverage that should be found in your condo insurance policy:
- Improvements: Co-owners are responsible for insuring the capital gains on the private portions of their unit. Examples are if a floating floor is replaced with hardwood flooring or a laminate countertop is replaced by a quartz countertop. It is safest to notify your insurer of any additions or renovations to the interior of your unit, even if these changes were made by the co-owner before you.
- Additional insurance for common areas and apportionment (loss assessment): The common areas are insured through the syndicate’s insurance policy. However, this coverage can serve as a supplement in the event that the syndicate’s coverage is insufficient, i.e. if the insurance amount on the building is not high enough.
- Additional civil liability coverage: The syndicate’s insurance policy should include civil liability coverage. However, this coverage should be added to your personal insurance policy to protect you in the event that the syndicate’s coverage is insufficient.
- Water infiltration and sewer backup coverage: Even if some coverage is included in the syndicate’s insurance policy and even if you live on the 10th floor, it is important to have this coverage to protect you if the syndicate’s coverage is insufficient or in the absence of such coverage in the syndicate’s policy.
5. Check the date that the water heater was last changed.
Did you know that if your condo’s water heater is between 10 and 12 years old, most insurers exclude damages caused to the condo by the water heater in question? When buying a condo, it is important to check the date of the water heater because it will be an additional expense to replace it. To learn more about this topic, read our article.
To conclude, don’t forget that in a condo, you are not only responsible for your own unit, but also for all of the spaces shared by the co-owners, such as the parking area, the elevator, and the hallways. If you have any questions about this or if you need to add coverage to your current policy, contact your Lareau broker.