Condo Fees
Marilyn Lincoln
May 19, 2007  

Q. As a condominium owner, I am very concerned regarding significant increases in my condo fees. Every year we receive another increase. My husband and I are concerned and are wondering if these increases are really necessary. Can these fees continue to increase indefinitely?

The reason for increases in your common expenses should have been revealed at your annual meetings of the corporation or indicated in the corporation's financial statement or auditor's report. These reports are sent to each owner prior to their annual meetings.

Your auditor also will receive notice of the meeting and, in most cases, will attend to answer owners' questions related to the audit report.

According to the Condominium Act, each owner has the right at an annual meeting to raise any matters relevant to the affairs of the corporation. That's why it's so important that owners attend all their annual meetings, so they are kept up to date and informed.

Condo fees are similar to city taxes. They are collected from each owner and the directors, like elected municipal officials, must direct a portion of these fees toward maintenance, repairs, replacements, reserve funds etc, while continuing to provide the best level of services demanded by all owners.

Condo fees can vary widely between neighboring condominium developments depending on what type of recreational facilities are offered.

Pools, saunas, whirlpool, weight rooms and tennis courts, for instance, are very expensive to maintain and operate. Condos that offer these would require much higher fees than those that don't.

In some cases, a condo board could be maintaining low condo fees because they are ignoring looming capital costs, such as replacing roofs, boilers, underground parking repairs, etc. When roofs and the pipes begin to leak, the board may not have enough reserves because they refused to increase the monthly condominium fees. As a result, owners could face a huge special assessment.

The monthly condominium fee is based on the outcome of the yearly budget. The budget is based on the amount of funds needed to manage the corporation throughout the fiscal year.

According to Ontario's Condominium Act, directors must do a reserve fund study to maintain a healthy reserve fund balance. This fund should cover the estimated cost of future major repairs and replacements of the common elements and assets of the corporation.

Unfortunately, some condominium corporations haven't completed a reserve fund study or have outdated studies.

Directors who choose to avoid this procedure are only fooling themselves. In the long run, all owners will suffer the consequences.

If the reserve fund balance is found to be inadequate, directors are responsible to take appropriate action to top up the reserve fund account. Such action usually will include regular condo fee increases over a certain period.

There is no provision in the current act that allows capping of your monthly common expenses.

This would be impossible to do, as unforeseen expenses and general costs continue to rise every year.

I would suggest that you contact one of your board members and arrange to meet, voice your concerns and ask why the increases were necessary.

In most cases, a responsible director will have a clear and reasonable explanation.

Marilyn Lincoln is a condominium unit Owner and Director of her Corporation.

Condominium Act does not provide for capping fees
I would suggest that you contact one of your board members and arrange to meet, voice your concerns and ask why the fee increases were necessary.