Calgary Real Estate BlogRecently posted or modified blog posts in the category - Condoshttps://www.jennifersipkens.ca/blog/Copyright JenniferSipkens.ca2023-10-12T07:01:57-07:00tag:jennifersipkens.ca,2012-09-20:20607Condo documents required for sale or purchaseThe documents required to sell and purchase a condo in Alberta are itemized in the listing agreement between the seller and the real estate brokerage, and then again in the purchase contract between the buyer and seller.
The seller must provide the following documents:
1) An information statement provided by the condominium corporation under section 20.52(1)(a) of the Condominium Property Regulation (Alberta);<br />Section 20.52(1) Subject to subsection (2), the following information and documents are prescribed for the purposes of section 44 of the Act:
(a) an information statement that includes all of the following:<br /> (i) the particulars of<br /> (A) any action commenced against the corporation in respect of which the corporation has been served, including the amount claimed against the corporation,<br /> (B) any unsatisfied judgment or order for which the corporation is liable, and<br /> (C) any written demand made on the corporation for an amount in excess of $5000 that, if not met, may result in an action being brought against the corporation;<br /> (ii) a statement setting out the amount of the capital replacement reserve fund;<br /> (iii) a statement setting out the amount of the contributions and the basis on which that amount was determined;<br /> (iv) a statement setting out any structural deficiencies that the corporation has knowledge of at the time of the request in any of the buildings that are included on the condominium plan;<br /> (v) loan disclosure statements for current loans, including documents showing the starting balance, current balance, interest rate, monthly payment, purpose of the loan, amortization period and default information, if applicable;
An information statement, or a disclosure statement, is obtained from the property management company, and will likely take a minimum of 3 days. The cost is borne by the seller, and typically is $150 plus any handling fees if the document has to be ordered on a third party website.
2) The particulars or a copy of any subsisting:<br /> a) Management agreement; and<br /> b) Recreational agreement;
The management agreement is the contract between the property management company and the condo board, and the name on the agreement should match the name on the Condominium Additional Plan Sheet of the corporation. If a building is self-managed, they will not have this document as it means that owners who are also board members are managing the complex directly.
A recreational agreement would pertain to complexes that have a recreational facility on site, such as a swimming pool or gym, and owners from other complexes are allowed to use the facilities.
3) The particulars respecting any post tensioned cables that are located anywhere on or within the property that is included in the condominium plan (if not already addressed in the information statement);
Post tension cables are high-strength steel cables that are embedded in concrete during construction. These cables are then tensioned after the concrete has hardened, which places the concrete under compression and enhances its strength. Post tension cables are commonly used in high-rise buildings and condos. They require additional maintenance and engineering reports, so it is very important for a buyer to do their due diligence if a building has post tension cables.
Copies of the following, to the extent that they exist:
a) The most recent budget of the condominium corporation;
The budget will set out the income and expenses required to run the condo corporation for the next fiscal year. From the budget, the amount for condo fees are set.
b) The most recent annual financial statements of the condominium corporation;
Annual financial statements can either be audited (the audit conducted by a third party) or unaudited (the board or management company finalizes the year end in a set of financial statements), but every condo corp should produce a set of year end financial statements.
c) The bylaws of the condominium corporation as registered at the Land Titles Office, or if the statutory bylaws apply, a copy of the statutory bylaws;
The <a href="https://www.jennifersipkens.ca/blog/condo-boards-and-bylaws/">bylaws </a>are the rules and regulations for the condo complex. They will include rules for how meetings are run (both board and annual) but more importantly for new owners – they will include restrictions for things like pets, air conditioners, renovations, even the colour of window treatments that face the outside.
d) Approved minutes of general meetings of the condominium corporation, held within the last 12 months;<br />e) If available, draft minutes of the latest general meeting of the condominium corporation if approved minutes are not available;<br />f) Approved minutes of condominium corporation board meetings held within the last 12 months;
A condo corp must hold an annual general meeting after the fiscal year end is complete. There are rules surrounding what will be discussed at the meeting, and it is a time for owners to ask the board questions relating to the building or complex. Some condo corps will hold monthly meetings for board members, or they may review and approve owner requests by email, and not hold any meetings.
g) Any separate lease agreement or other exclusive possession agreement benefitting the seller of the property, including agreements allowing the seller to use a parking stall or a storage unit;
<a href="https://www.jennifersipkens.ca/blog/parking-options-when-buying-an-apartment-condo/">Parking stalls</a> and storage units may be titled, assigned or leased. If they are leased, there will be a separate agreement outlining the details of the lease. You can read more about the different types of parking options HERE.
h) A statement from the condominium corporation setting out the criteria used to determine unit factor allocation (if not already addressed in the information statement);
A condo corporation uses unit factors to determine the portion of ownership in the condo complex or building. They are much like shares in a company. Each condo corporation has 10,000 unit factors and each owner has a certain amount of them, generally depending on the size of their unit in relation to others (but there are exceptions to this!)
4) Any consolidation of the rules (policies/procedures) made by the condominium corporation which may be available under section 32.1 of the Act;
A condo corp can create additional rules beyond the bylaws for the condo corp. They are often more detail oriented and on things like specifications for flooring which may change over time.
5) Copies of reports prepared for the condominium corporation by professionals since thee date of the most recent reserve fund study, including professional engineers but excluding reports requested and obtained by the corporation’s legal counsel in relation to actual or contemplated litigation;
These reports will include engineering reports for buildings with post tension cables but will also include reports if ordered by the board in the event there is a major repair coming up in the complex.
6) A current insurance certificate for insurance held by the condominium corporation;
Every condo corp must have insurance for common areas and will cover things like fire or water leakage and of course general liability. It is important that you still have your own insurance to cover your unit and your personal property within that unit. If you would like to read additional tips for insurance you can read more <a href="https://www.jennifersipkens.ca/blog/a-little-bird-told-me-about-insurance/">HERE</a>.
7) The current standard insurable unit description for the residential units or classes of residential units;
The Standard insurable unit description (SIUD) outlines the finishes of the condo from when it was built, so in the event of an insurance claim, the responsibility of the condo corp is limited to the items on the SIUD. Anything that has been updated since then is covered by your own personal insurance. So if the condo came with carpet and you upgrade to very expensive hardwood, the condo corp covers the cost of the carpet, then your insurance would have to kick in to cover the rest.
8) The current reserve fund plan, the current reserve fund report, and annuyal reports prepared since the date of the current reserve fund plan; and
The <a href="https://www.jennifersipkens.ca/blog/what-is-a-reserve-fund-study/">Reserve fund report and study</a> are a forecast of capital expenditures the condo corp can expect for the next 25 years. It will look at the roof, heating systems, windows, parkade costs – anything that is owned by the condo corp. It is a very important document to review, because if a board has not been budgeting for future costs adequately, or there is an unexpected significant cost coming up, it will be in this report.
9) Other.
This is where you may want to add in most recent month’s financials, or if there is something you want to see that pertains to a specific building.
A buyer will get a significant amount of documents that they must review prior to proceeding with a purchase. The onus is on the buyer to do their own due diligence when making the purchase. That said there is help available! There are Condo Document Review Specialists who can be hired by the buyer to review the documents and provide an opinion.
The above information is provided as general information and is not considered legal advice. Please consult your lawyer if you have any questions or concerns about this information.2023-10-09T17:17:22-07:002023-10-12T07:01:57-07:00Jennifer Sipkenstag:jennifersipkens.ca,2012-09-20:20091What is a Reserve Fund Study?Essentially a Reserve Fund Study (RFS) is a 25-year plan to repair or replace capital assets of the corporation, so items like the roof, heating system, exterior doors, etc. A portion of the condo fee goes into a Reserve Fund to help pay for these items.
Reserve Fund Study: the physical inspection of the condominium’s depreciating property – this is a site visit that is conducted by the reserve fund planner and often the board will walk the property to discuss any issues since the last study was completed.
Reserve Fund Report: the written document outlining all the findings from the reserve fund study. The report must identify what may need to be repaired or replaced, assess the present condition of the property and estimate when it will need to be repaired or replaced, and estimate the costs of repair or replacement (at a cost no less than current costs).
Reserve Fund Plan: this is a large spreadsheet that demonstrates how much money is needed to maintain the reserve fund based on the report. The Plan will start with the current level of funds in the reserve fund, then show the items slated for repair or replacement each year, the amount of money required to pay for the items, and an ending balance for that year. This is where you will see if they plan to have a <a href="https://www.jennifersipkens.ca/blog/what-is-a-special-levy/">special levy or assessment</a> or increase condo fees to cover any shortfalls in the Plan.
Reserve Fund: A separate bank account to help pay for the items listed in the Reserve Fund Plan. Many condo corps will invest some of this money into higher interest savings accounts.
The funds in the Reserve Fund can only be used for items in the Plan, unless a special resolution has been called and at least 75% of owners agree to use the funds for a specific purpose.
When a condo plan is first registered (so a new build) the corporation has 2 years following registration to complete a reserve fund study and report, and then must complete a study every 5 years afterwards. Corporations also have the option to do them more often than 5 years.
If a condo has fewer than 12 units, the owners can choose how to conduct a RFS. They may hire a planner, or by special resolution, let the corporation be its own reserve fund study provider (must still meet all criteria and guidelines for the reserve fund study and report).
Annual report: the corporation must prepare an annual report on the reserve fund. It must include:
Amount of reserve fund on the last day of the preceding fiscal year
All payments made into and out of the refund that year
A list of the property that was repaired or replaced and the costs incurred
Total payments by ordinary or special resolutions
List of any property projected to be repaired or replaced during the current fiscal year, including the projected costs of the repairs and replacements.
2023-08-13T07:50:24-07:002023-08-13T07:53:36-07:00Jennifer Sipkenstag:jennifersipkens.ca,2012-09-20:20070Renting out your CondoHere are some things to know if you are thinking about renting out your condo!
There are no restrictions on your ability to rent out your condo. Alberta’s Condominium Property Act (the Act) does not allow corporations to create bylaws that prevent owners from renting out their condo. However, they can make restrictions and requirements that owners must follow.
Restrictions in renting out your condo. You must give notice to the condo corporation of your intent to rent out the unit. The notice must include the address where the owner can be served with any notices and must include the amount of rent being charged. The owner must also provide the corporation with the name of the tenant(s) within 20 days from the start of the tenancy. If the tenancy ends, the owner must notify the corporation within 20 days.
Short term rentals. The condo corporation may have a bylaw restricting short term rentals in the complex. An example of what this would look like: An owner shall not use their Unit, or any part thereof: for hotel or guest house type purposes; any Airbnb, VRBO, Homeway for FlipKey or similar type accommodation unless such use constitutes an authorized, permittd or discretionary use or approved "class 1 home occupation" as defined in the relevant Municipal bylaw.
Your tenants must follow the rules! Your tenants are required to comply with the bylaws of the corporation. It is best to provide your tenants with a copy of the bylaws and any rules documents your condo corporation have produced.
Deposit from owner. You may be required to pay a deposit to the corporation if you rent out your unit. The Condominium Property Regulation sets the maximum rental deposit that may be charged to an owner for a unit rented to a tenant at $1,000 or one month’s rent, whichever is greater. The deposit is to be returned within 20 days after the owner gives the corporation notice the unit is no longer a rental.
Recovery of costs if unit is damaged. If a tenant causes damage, the corporation can seek payment from the owner, including putting a caveat on title for recovery of costs.
This information is intended to provide general information only, and is not a substitute for legal advice. <br />Information supplied by the Government of Alberta via Service Alberta.2023-08-07T06:34:26-07:002023-08-07T06:48:36-07:00Jennifer Sipkenstag:jennifersipkens.ca,2012-09-20:18313Parking options when buying an apartment condoThere are four parking options available for apartment condos.
No parking – this is probably the most important, because if you have a car and you want to park it close to where you live, you need to confirm the unit you are purchasing comes with parking! Most apartment condos come with parking, but be sure to tell your REALTOR® that you need parking so they can filter out any condos that do not come with it.
Titled parking – this is where you would own the parking stall. You will have a separate title to the parking stall, a separate tax bill for it, and the condo survey plan registered at land titles swill show the stalls on the parking plan outlined with solid lines.
Assigned parking – this is where the condo corp owns the entire parking space and assigns stalls to units. How they manage this will be outlined in the corporations bylaws or additional rules/regulations they establish as a condo board.
It is not guaranteed that the stall you have when you purchase will not change, and the board may reassign a parking stall upon sale of a unit. If the location of a stall is a deal breaker for you, then a condition can be added in the contract that the buyer will seek and obtain written confirmation from the board that they will be assigned a particular stall. If you can’t secure that stall, you can choose not to waive the condition, and not purchase the property.
Leased parking – this is where the board enters into a lease agreement with the living unit owner to secure a certain stall for a fixed time. The lease’s cost, length and ability t to renew, cancel or sell the lease may all be important to the buyer. Although rare, leased parking can sneak up on a buyer when assumptions about the parking situation are not made and confirmed.
It is important to confirm the parking type when purchasing a condo. The parking type can be found on the land title, survey plan, Additional plan sheet, and bylaws. Although reviewing restrictions in the bylaws is important, a REALTOR® is not qualified to review condo documents for any client, so you can have the condo documents reviewed by a professional. 2023-05-29T07:00:00-07:002023-06-01T06:28:08-07:00Jennifer Sipkenstag:jennifersipkens.ca,2012-09-20:17872Condo boards and bylawsLiving in a condo is a very different from living in a home and owning the land underneath you. You own shares in a condo corporation, and a Board of Directors (BoD) makes most of the decisions on behalf of all owners. They do have a set of bylaws that were created at the time the complex/building was completed, and often a set of rules to further define the bylaws.
The board is the one who approves the budget, although members approve the auditor. Weird, but true. The board can also declare a special levy, (aka special assessment) when needed. Read more about special levies <a href="https://www.jennifersipkens.ca/blog/what-is-a-special-levy/" target="_blank">HERE</a>.
Meetings can be held virtually, and there are some condo boards who don’t have meetings, they vote on requests by email. That is quite rare, but it can happen. There will be a requirement to have an annual general meeting once per year, and that is the time owners can ask their BoD questions and get an update on what is happening in their complex/building.
Another fun fact: boards can also levy fines for those in breach of bylaws. That will be outlined in the bylaws.
The bylaws will also let you know if short term rentals are allowed in the complex/building. They cannot restrict renting or leasing your unit – but they can restrict short term, AirBnB, and tenants that do not meet any age restrictions in the building. Your tenant must follow the bylaws, so it is best to give them a copy of the bylaws, or at minimum, highlight the bylaws that could impact them.
Living in a condo is great, because you don’t have to worry about the exterior of the building, or dealing with things like roof repairs or replacement, you are only responsible for what is in your unit. That said, it is important to know and understand your responsibilities as an owner, and the bylaws is a great place to start!
If you are thinking about buying a condo – call me, let’s chat! I own an apartment and townhouse style condo, have been on the boards of each property, so have a very good understanding of the pros and cons of condo living!2023-04-25T08:19:37-07:002023-04-25T08:22:48-07:00Jennifer Sipkenstag:jennifersipkens.ca,2012-09-20:17871What is a special levy?A special levy (previously known as “special assessment”) is a type of financial contribution that the condominium board can impose (by resolution) on condominium unit owners. It may be levied as a one-time lump sum or as an extra payment, in addition to condominium contributions (fees).
When can a condo board impose a special levy?
A condo board can impose a special levy in certain situations, for example to:
Pay for unexpected and urgent maintenance, repair or replacement of the corporation’s real and personal property, common property or managed property
Cover unexpected shortfalls in the operating account
Increase the balance of the reserve fund to meet the requirements in a <a href="https://www.jennifersipkens.ca/blog/what-is-a-reserve-fund-study/">reserve fund plan</a>
Pay for capital improvements (a special resolution is needed)
Satisfy a judgment against the corporation or
For any other purpose under the Condominium Property Regulation
What is the process of approving a special levy?
To approve a special levy, the condominium board passes a resolution, which must set out the following information:
the purpose of the levy
the total amount to be levied
the method for calculating the special levy
the date by which the levy or installments are to be paid
As soon as possible after passing the resolution, the board must inform owners of the following information:
the purpose of the levy
the total amount of the levy
the method for calculating each unit’s share of the levy
the amount of the owner’s unit’s share of the levy
the date by which the levy or installments are to be paid
If the amount collected exceeds the amount required or is not fully used for the purpose in the resolution, then the corporation must pay the money into the reserve fund.
How is a special levy calculated?
Each owner’s portion of a special levy is calculated based on unit factor unless the Condominium Property Regulation or bylaws say otherwise. The unit factor is also used to assign condominium contributions (fees). If you’re unsure of how unit factors are assigned in your condominium, check the schedule attached to your condominium plan.
Before You Buy: What you need to know
Sellers must disclose if there is a pending special levy that is not included in the condominium documentation. The requirement to pay the special levy remains with the unit and becomes the responsibility of the new owner. Carefully consider whether you want to purchase a condominium unit with a pending special levy, as it will increase your costs significantly.
You should also consider why a special levy was levied. For example, was it levied to repair a leaky roof? Are there ongoing issues with the structural integrity of the building? Review the condo’s reserve fund documents and ask questions of the condo board, property manager, and other unit owners.
It is also important to consider if the condominium has a history of imposing special levies. Ask your lawyer and document review company to help you review the condo corporation’s documents to determine if there will be ongoing issues due to financial mismanagement.
Why did I get a special levy notice when the reserve fund seems adequate?
A condominium corporation’s operating budget and reserve fund are separate and distinct accounts with their own rules. For example, money from a reserve fund can only be used to cover the cost of repairing and replacing the corporation’s real/personal property, common property and managed property; it cannot be used to cover operating expenses. However, a special levy may be levied against condo owners to cover operating expenses.
Do I have to pay a special levy? What if I disagree with the special levy?
As an owner, it is your responsibility to pay your portion of the special levy when it is due, even if you disagree with it. If you don’t pay the special levy, the condo board could take any of the following actions:
charge interest on the unpaid amount (up to 18% per year)
sue you for the unpaid amount, plus any interest and legal costs
if you have a mortgage, ask your mortgage company to pay the outstanding amount
if you have a tenant in your unit, require the rent to be paid to the condominium corporation to cover the unpaid amount
file a caveat against your property title
foreclose on the title to your unit
If you want more information about why the special levy was imposed, talk to your condo board and ask questions. It is your responsibility as an owner to keep yourself informed about the finances of the corporation. Consider becoming a member of the condo board if you want to have greater input on the financial direction of the condominium corporation.
Information from Condo Law for Albertans, downloaded April 25, 2023. This does not constitute legal advice, and is applicable to Alberta only. Read full artcile <a href="https://www.condolawalberta.ca/finances/special-levy/#:~:text=A%20special%20levy%20(previously%20known,to%20condominium%20contributions%20(fees)." target="_blank">HERE</a>.2023-04-14T08:15:00-07:002023-08-13T07:55:03-07:00Jennifer Sipkenstag:jennifersipkens.ca,2012-09-20:15857Condo documents explainedCondominium properties represent a large number of sales in all Alberta markets every year, and the issues that surround the purchase and sale of condominium properties are specific and intrinsically linked to the condominium documents. It is widely understood that condominium ownership provides a carefree lifestyle option, but confusion over condominiums can be expensive.
Legislative landscape<br />As you would expect, the Real Estate Act of Alberta as well as the Real Estate Act Rules, govern the transaction of condominium properties, because condominium is a form of owning real property. As an additional complexity, condominiums are also governed by the Condominium Properties Act of Alberta which relates to the running of the condominium corporation itself, as well as specifics about how condominiums are bought and sold.
Condominium clarity<br />One of the biggest misconceptions about condominiums is what exactly a condominium is. Many consumers believe a condominium is an apartment-style property in a complex which offers amenities for its owners. Although this may be accurate, it is not the whole story, as a condominium can be almost anything from an apartment or townhouse to the lot under a single-family home or a 20-acre parcel of rural land. The reason for this is that a Condominium is a type of corporate ownership of a project, rather than simply owning a piece of individual real estate.
Condominium Docs importance<br />When a buyer considers buying a condominium property, it's important to frame thoughts around that purchase so the buyer clearly understands what condominium ownership means. Financial health, assets, liabilities, renovation funds, debts, and restrictions, are only a few of the things a buyer needs to consider when deciding to invest their money into a condominium corporation. The condominium documents serve the purpose of satisfying the informational needs of the purchaser to evaluate that investment profile.
What documents are required?<br />Thankfully consumers are not left alone to figure out what documents are critical when considering a Condominium purchase, as the Condominium Properties act specifies which documents should be prepared by all condominium corporations in Alberta, and the Alberta Real Estate Association has undertaken to include this list and other important documents in the standard purchase contract for condominiums used by REALTORS®. By ensuring consumers make their purchase conditional to the review of condominium documents, REALTORS® help buyers gain the transparency they need when making the purchasing decision.
Who should review the documents?<br />The REALTOR® responsibilities end with helping the buyer understand their need for these documents and where to get them. A REALTOR® is not qualified to review condo documents or provide advice on their contents. A REALTOR® may help a buyer check the list of documents provided by the condo board or management company against the list in the purchase contract, however, it is the buyer's responsibility to review the content themselves. If a buyer does not feel confident in reviewing the documents themselves, there are several qualified condominium document review services available at an additional fee which can help a buyer identify points of concern in the documents and give advice on the contents of the documents themselves.
Potential Pitfalls<br />Condominium ownership is different from traditional non-condominium ownership in that your ownership is a share of the whole project. This means if the project requires upgrades it is the responsibility of all owners to pay for those upgrades. If the financial management of the corporation has not been diligent in planning for upgrades or maintenance, the result is usually a special assessment, or “cash call”, which is a bill due and payable by the individual owners. Special assessments can run [from a couple thousand] to the tens of thousands per unit and can not be avoided as an owner, but can often be avoided through competent examination of the condominium documents before the purchase (note: this is only if the issues have been discussed at board meetings so a buyer can see a potential issue). Other things that can be caught at the time of purchasing through the documents are pet restrictions, parking issues, age restrictions, and financial health of the corporation all of which may be concerns the purchaser should know about before they own the property.
Condo Fee confusion<br />Condo fees in their most pure form are simply the amount of money required to run the corporation, maintain the total project in good repair, and save a portion for future repairs and replacements. Oftentimes buyers look for the property with the lowest fee, however, if that low fee is not covering the expenses and required savings for future repair and replacement, then a special assessment is inevitable. Good financial stewardship is vitally important to the health of a condominium corporation, and the condo docs can help determine if the condo has been well run and the condo fees are representative of the current and future needs of the complex for the benefit of all owners, present, and future.
I am a Certified Condo Specialist - which means I took extra courses in buying and selling condos, and I happen to own an apartment style, and a townhouse style condo. I have also been on the boards of both - so I know and understand the ins and outs of condos. Don't hesitate to reach out to me if you have any questions!
Published by AREA November 20222022-09-24T20:00:00-07:002023-08-13T07:57:07-07:00Jennifer Sipkens