If you live or plan to buy a home in a strata-titled building or complex, like a condo or townhouse, then you’ll need to get familiar with strata fees. These fees are used to cover the costs of maintaining and managing common areas and amenities within the complex, and are paid by unit owners every month. Given this extra cost, it’s important to understand exactly how much these fees are and what they should be based on the shared amenities in your complex.
Key Points
- Strata fees cover the cost of maintenance and repairs of common areas and shared amenities in a strata-titled complex.
- Strata fees vary depending on the complex and should be appropriate for the amenities provided to owners.
- Each province has its own set of regulations that govern strata fees.
What Are Strata Fees?
When you purchase a property in a strata-titled complex, like a condo or townhouse, there are typically common areas that can be used by residents. These shared amenities and areas may include a pool, fitness room, or a concierge service, among others.
These amenities may be accessible, but they’re not free. Instead, they’re paid for through something known as strata fees, also known as condo or maintenance fees. These are mandatory fees that are often paid monthly.
What Factors Are Considered When Determining Fees?
A number of factors are considered when the property management of your building or area determines the monthly strata fees. Below are common factors that apply to nearly every property that incurs strata fees.
Utilities
Strata fees cover some, if not all, of the water, heat, and hydro. In older buildings, heat may be centralized instead of controlled in each unit. If this is the case, then heat would likely be included in your strata fees as well.
Size Of The Building
How large the building you live in will play an important role in how expensive your condo fees are. Generally speaking, larger buildings tend to have lower condo fees because the cost is split among more people.
Size Of The Unit
Strata fees are typically calculated by the size of the unit. For instance, if your condo is 1,000 square feet and you’re paying 70 cents per square foot, your monthly condo fees would be $700. Keep in mind that lockers and parking spaces may have separate fees.
Reserve Fund
A portion of your condo fees is contributed to a reserve fund every month. A reserve fund is mandatory for every building to have under the Condominium Act in Canada. In the event of an emergency within the building, money within the reserve fund is used to cover the cost of an unexpected repair.
Repairs And Maintenance
Regular repairs and maintenance required for the basic operation of your building’s common amenities are always included in your strata fees. Examples include landscaping, snow removal, garbage disposal, and cleaning of common areas.
Available Amenities
The more amenities a building offers, the higher your condo fees may be. Some buildings come with a gym, pool, party rooms, security system, and valet, all of which are paid for through your strata fees. Your condo fees cover the usage, operation, and upkeep of these amenities.
Building Age
Older buildings tend to cost more to maintain than new buildings. This is because older buildings break down more easily and more often than newer buildings do. That being said, new buildings don’t always have the lowest strata fees, it all depends on what else is included in the cost.
Building Location
Certain areas have higher costs of living, such as major cities like Toronto, Montreal, and Vancouver. As such, condos in cities like these often have higher condo fees due to increased costs for amenities, utilities, and maintenance. Higher-end complexes may also command higher condo fees.
Are Condo Fees And Strata Fees The Same Thing?
The short answer is yes, condo fees and strata fees are the same thing. Both terms describe the regular payments made by owners of properties in common interest developments (CID) to cover the costs of maintaining common areas and shared amenities.
Many Canadians are turning to CIDs since the cost of an individual, freestanding home is so expensive. Let’s explore the different types of CIDs below, which are all subject to strata fees, also known as condo fees.
Condominium
With a condo, the homeowner owns their individual unit within a complex. All of the homeowners share interests in the common areas, such as elevators, hallways, patios, parking garages, and lobbies. The common areas are managed and owned by a condo corporation and the owners of units.
Strata
Unless you live in British Columbia, a condo and strata are the exact same thing. In BC, strata refers to apartments that have two or more levels within an apartment community. Despite this minor distinction, the management of a strata and a condo is essentially the same.
Co-Op Association
A co-op owns a particular property, including its facilities and common areas. The residents of the co-op own a share of the co-op association, which is a requirement to occupy the unit.
The difference between a condo and a co-op comes down to ownership: unlike condo owners, co-op residents don’t actually own their unit. Instead, they have a share within the co-op. Once a homeowner has a share in a co-op, they have the right to lease their unit within the community.
Shares in a co-op are considered to be an intangible personal property which usually cannot be used as security for financing, unfortunately.
Homeowners Association (HOA)
An HOA is a non-profit organization that oversees developments or alterations of shared property. The goal of an HOA is to improve the overall community and related experiences. They generally have more responsibilities and objectives than a regular condominium association.
HOAs are composed of homeowners within the housing community who are actively involved in the maintenance of the shared areas and enforcement of the rules of the community. The HOA owns the common areas of the development and is responsible for charging homeowners their monthly fees.
How To Tell If Your Strata Fees Are Too High
You certainly don’t want to pay more in strata fees than you have to. To determine if your strata fees are too high, you will first need to assess the age of the building and what is included. Once you know that information, you can gauge how reasonable the fees are for what you are getting.
If you’re having trouble gauging the reasonability of the fees, try looking for similar properties and compare the strata fees. If one set of fees is completely different from the other set of fees, that could be a cause for alarm.
If you’re considering buying a condo with strata fees, getting a copy of the Status Certificate is highly recommended, as it provides you with a snapshot of the condo’s financial health.
What About Strata Fees That Are Too Low?
We all want to pay as little as possible for our living expenses. If you found a property with low strata fees, you might think you found a great deal, but not so fast. Strata fees that are very low can indicate poor management and inadequate building maintenance. You don’t want to invest in a building that is not being maintained properly because it could impact the value of your unit.
Before you complete your purchase, you might want to hire a realtor or real estate lawyer to assess your strata fees. Not only will they be able to tell you exactly what you’re paying for, but they can also assess the reasonability of the fees and give you a professional opinion. You’ll also want to have your lawyer obtain the Status Certificate to assess the financial health of the condo.
Why Strata Fees Aren’t Always A Bad Thing
Knowing that you need to pay strata fees on top of a mortgage and other housing costs can be daunting, frustrating, and discouraging. However, strata fees aren’t all bad. In fact, there are actually benefits to paying strata fees. Let’s explore some of these benefits below.
- Amenities At Your Disposal. If you want access to a home security system, pool, spa, and/or gym, you’d have to pay for it out of pocket to gain access to it. However, if these kinds of amenities are included in your building, the cost is paid for within your strata fees.
- Regular Upkeep And Repairs. Strata fees cover the cost of maintaining common areas of the complex, ensuring they are clean and well-kept. They also fund repairs for shared facilities, such as roofs, elevators, parking lots and garages, which can be quite costly.
- Professional Management. Strata fees cover professional property management services that deal with everyday operations, ensuring that the property runs smoothly. This is also very important to ensure the property value of your home, as regular maintenance and good management can increase the overall property value and attractiveness to prospective buyers. It also includes security and cleaners.
Are Strata Fees Regulated In Canada?
Yes, strata fees are regulated in Canada, though each province has its own legislation overseeing strata properties. These regulations detail the responsibilities of strata corporations, including how fees are determined. That said, the exact amount of strata fees is determined by individual strata corporations based on operating costs.
Examples of individual provincial acts that govern strata fees include the following:
| British Columbia | Strata Property Act |
| Alberta | Condominium Property Act |
| Ontario | Condominium Act |
| Quebec | Civil Code of Quebec |
What Happens If The Reserve Fund Isn’t Big Enough?
As mentioned, a reserve fund is meant to cover expensive repairs, like roof replacement or electrical system repair. Ideally, the reserve fund should have adequate funds to cover these costs, but sometimes, it’s not enough. This can happen due to a lack of proper financial management.
If there is not enough money in the reserve fund, the following may occur:
- Special Assessments: A special assessment involves an additional one-time fee to owners to cover the reserve fund’s shortfall.
- Increased Strata Fees: The condo board may decide to increase monthly fees to top up the reserve.
- Loans: If necessary, the strata corporation may consider borrowing money to pay for immediate repairs. This can result in higher fees for owners in the future.
- Deferred Maintenance: If the condo does not have sufficient money to pay for repairs, essential repairs may be postponed, which can have a negative impact on the building and may result in higher costs down the road.
- Lower Property Value: Property values may drop as potential buyers will factor in the lack of reserve funds and the potential for big costs in the future.
Bottom Line
Living in a community with strata fees has its benefits, but these advantages aren’t always right for everyone. If you’re a handy individual who is easily capable of repairing and maintaining a property on your own, you may think strata fees are a waste of money. On the other hand, if you don’t want the burden of repairs and maintenance on your hands, then strata fees are worth your while. Just be sure what you’re paying is fair, which your real estate agent may be able to help you determine.
