Condo Fees and the Status Certificate Explained

What maintenance fees cover

Monthly maintenance fees (formally called common expenses) fund two things: the building's operating budget and the reserve fund. The operating budget covers the day-to-day costs of running the building:

• Building insurance — covering the structure, common elements, and standard unit finishes (your own contents require separate insurance)
• Property management company fees
• Utilities for common areas — electricity, water, heating and cooling in hallways, lobby, gym, and other shared spaces
• Cleaning and janitorial services
• Landscaping, snow removal, and exterior maintenance
• Security, concierge, or front desk staff where applicable
• Elevator maintenance contracts
• Amenity operating costs — pool chemicals, fitness equipment service, etc.

Whether your unit's hydro, gas, water, or heating and cooling are included in your maintenance fee depends on the building's metering setup. Many newer condominiums are individually metered for hydro and sometimes water — meaning you pay these utilities directly, separate from your maintenance fee. Older buildings are more likely to include utilities in the fee. The disclosure statement and your purchase agreement will specify what is and isn't included.

What maintenance fees don't cover

There are important costs that maintenance fees never cover, regardless of building:

• Your unit's contents: Furniture, electronics, personal possessions — your own condo insurance covers these
• Improvements above the standard unit: If you upgraded finishes beyond the builder's standard, you are responsible for insuring and maintaining those upgrades
• Your mortgage: The maintenance fee has no relationship to your mortgage payment
• Your unit's property taxes: Billed to you directly by the municipality — separate from your maintenance fee
• Internal repairs: Leaky faucets, appliance failures, interior paint, and everything inside the four walls of your unit are your responsibility (subject to what your condo's declaration says constitutes a "standard unit")

How fees are set and how they change

The condominium corporation's board of directors approves the annual budget each year. The budget determines the total amount that needs to be collected from all unit owners, and each unit's share is proportional to their common interest percentage (set out in the condominium's declaration).

For new buildings, the initial fee budget is prepared by the builder and disclosed to buyers before or at the time of signing. These initial budgets are frequently set conservatively — sometimes too conservatively. Ontario's Condominium Act restricts fee increases in the first year, but after that the board can approve increases based on actual costs. It is common for new buildings to see their fees increase 10–25% in the first few years after registration as costs are better understood.

When evaluating a pre-construction condo, treat the disclosed maintenance fee as an estimate, not a fixed cost. Build in a buffer of 15–20% when modeling your long-term carrying costs.

The reserve fund

The reserve fund is separate from the operating budget and is legally required under Ontario's Condominium Act, 1998. Every unit owner's monthly maintenance fee includes a reserve fund contribution — typically 10–25% of the total fee. These contributions accumulate over time to fund major capital repairs and replacements.

Capital expenditures covered by the reserve fund include roof replacement, elevator modernization, parking garage membrane repairs, window replacements, lobby and common area renovations, mechanical system overhauls, and any other major expense that is not routine day-to-day maintenance. These are one-time or infrequent costs that would be unaffordable if charged to owners all at once.

Under the Act, every condominium must commission a reserve fund study within the first year of registration, and update it at least every three years. The study is conducted by a qualified engineer or planner and forecasts all expected capital expenditures over a 30-year horizon, along with the funding plan required to cover them. The reserve fund study is included in the status certificate.

What a status certificate is

A status certificate is a snapshot of the condominium corporation's financial and legal health at a point in time. Under the Condominium Act, any unit owner or buyer has the right to request a status certificate for a unit. The corporation must provide it within 10 days of the request. Builders typically charge $100–$200 for the certificate.

For resale condo purchases, reviewing the status certificate with your lawyer is standard practice and strongly recommended. For new pre-construction purchases, a status certificate is not available at the time of signing (the building doesn't yet exist as a registered condominium), but the disclosure statement serves a similar purpose and must be reviewed carefully.

A status certificate for a completed building contains:

• The current monthly common expense (maintenance fee) for the specific unit
• Whether the seller has any arrears in common expenses
• A copy of the current budget
• The current reserve fund balance
• The most recent reserve fund study
• Whether there are any known or pending special assessments
• Any outstanding judgments or litigation against the condominium corporation
• The declaration, by-laws, and rules of the corporation

Special assessments and what they mean

A special assessment is a one-time charge levied against all unit owners when the reserve fund does not have sufficient money to cover a major capital expenditure. They are a sign that the building's reserve fund has been underfunded — either because contributions were set too low in past budgets, or because an unexpected expense arose.

Special assessments can range from a few hundred dollars per unit for a minor repair to tens of thousands of dollars per unit for major structural work. A parking garage waterproofing project at a 200-unit building might cost $4 million — that's $20,000 per unit if the reserve fund can't cover it.

Special assessments must be disclosed in the status certificate if they have been levied or are being planned. A pending special assessment is a significant factor in the value of a condo unit — and one of the primary reasons your lawyer should review the status certificate before you firm up on a resale purchase.

How to evaluate whether a building is well-managed

For new buildings, the questions to ask are: what does the first-year budget project, and does it seem realistic? Look at the proposed maintenance fee relative to comparable buildings in the area. If it is materially lower, determine whether that is because the amenity package is simpler, or because the budget may be underestimated. Review the reserve fund study in the disclosure document and ask your lawyer whether the proposed funding plan looks adequate.

For established buildings, the status certificate tells you almost everything you need to know. A well-managed building has: a reserve fund balance that tracks or exceeds the reserve fund study's recommended balance, no pending special assessments, no material litigation, and a track record of moderate, predictable fee increases rather than large sudden increases. These are the signals of a board and management company that are running the building responsibly.