- Common expenses (condo fees) : Special assessment
Definition : Common expenses (condo fees) - Special assessment
Amounts of money requested by the syndicate of co-owners from all the co-owners generally to pay expenses that were not provided for in the co-ownership’s annual budget forecast. This type of request for funds is often related to the execution of work, by the syndicate when it is not possible to use the contingency fund by reason of the nature of the work, or because of a contingency fund insufficiency
Almost every insurance policy includes deductibles, in varying amounts according to the insured risk (e.g. fire and water damage). In co-ownerships, deductibles are a factor in the Building insurance, and in the third party liability insurance of the syndicate, directors, general meeting officers, co-ownership manager (gérant) and of the condo manager (gestionnaire). Regarding co-owner’s insurance, generally each home insurance policy contains one or more deductibles for various amounts according with the nature of the loss.
Preparing a budget forecast is an unavoidable task in co ownership. Its preparation, preliminary examination and adoption will ensure the proper functioning of the syndicate of co-owners. It is up to the Board of Directors to define its terms, in view of the expenses that will have to be paid to allow a syndicate to meet its obligations. The budget also makes it possible to fix the amount of the contributions of each co-owner to the expenses of the co-ownership.
It will be prepared by the Board of Directors or property manager, based on the amounts spent in preceding financial periods, as well as anticipated non-recurring expenses. The preparation of the budget forecast requires time and rigor.
Administrative, maintenance, replacement, improvement or alteration expenses of the common portions are divided among the co-owners. General common expenses are to be distinguished from particular common expenses, which are allocated under different rules. In the first case, it is the relative value of each fraction that is used to establish the co-owners contribution. As for special common expenses arising from common portions for restricted use, the co-owners using them are alone responsible of the expenses resulting therefrom.
Before purchasing the apartment of your dreams, find out the status of the expenses (condo fees) of the apartment owing by the vendor, as you will have to pay the arrears once you become the owner of the apartment.
Co-ownership work is of the utmost importance. Yet, they are more often than not overlooked by the syndicates of co-owners. Work that needs to be done in common portions can be minor or major in scope. Yet one needs money to pay for them. Good financial planning is therefore advisable in the medium and long term, so that the community of co-owners can adequately protect its real estate investment.
Replacing windows, the roof or rehabilitating the underground parking slabs, to name just a few examples, is usually very expensive. Three options are available to the syndicate to pay for this work:
Common expenses or “condo fees”; you will have to pay them once you become an co-owner. They are an important element to consider before your purchase.
Question: I bought my condo 3 months ago and I just attended my first meeting of co-owners. I just learned, to my great surprise, that very important work must be undertaken on the masonry of the building. My seller never told me about this work, although it is obvious that he must have known about it since all the other co-owners present at the meeting seemed to be aware of it. Could I turn against my seller because they hid this work from me and had a duty to tell me?
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