Buying a condo
“Buy the ticket, take the ride.”
—Hunter S. Thompson

Many condo owners in Ontario live in well maintained and properly managed buildings. However, there are thousands of very unhappy owners who realize that they made a big mistake when they bought their units.

The difference between the two consists of being an informed purchaser, being able to adjust to condo living, good fortune and knowing when the building is starting to slide and that it is time to sell.

Uninformed buyers
It is shocking how little most first time buyers know about buying a condo. Many buyers spend more time researching, evaluating and getting expert opinions on what smart phone they should buy than they spend on purchasing their next home.

1. They do not look
One experienced real estate salesman told me that in twenty-five years in the business, he might have had six buyers who asked to see the parking space, the locker or the amenities. Buyers just drive up to the front of the condo, walk through the lobby, look at the apartment and if they like it, they make an offer.

Many buyers who bought resale units in our second condo building never asked to see the building's amenities, never looked in the dirty and dark parking garage, never noticed the badly stained carpets or the dirty garbage-chute rooms or the shabby locker areas. Somehow they missed the construction debris left on the property and the sand and dirt where the flowerbeds should have been.

New buyers buy off plans and drawings of model suites not knowing that what they will actually get can be smaller units than shown with less attractive furnishings and cheaply appointed amenities.

2. They do not read
I never met anyone who read the status certificate, the declaration, the by-laws or the corporation’s rules or any of the other documentation they were given before they bought. Not one.

One buyer of a re-sale condo told me that the big pile of documents looked like a phone book so he did not look at any of it. He sure regretted that later when he found out that the corporation was in serious financial difficulties.

3. They do not understand
Let's start with a word association game.
• condominium • co-op

• commune

• kibbutz

• collective farm

A condominium corporation is a private collective of individual owners who volunteered to share a property for either residential or business purposes.

Everyone signs a legal document agreeing to share in the costs of operating and maintaining the property and to live and act in according to the Condo Act, and that particular condo's declaration, by-laws and rules. They also agree that the collective has the right to take legal action against anyone who violates their condo instruments and rules.

So all owners have to follow the rules set by the majority of directors on the condominium's board. They also have to pay the fees that are set by the majority on the board.

4. They give up absolute privacy
Many condo owners think that they have the same right to privacy as they would have in a detached house. That is not so. The superintendent or the condo's contractors can enter the private units, under certain conditions, and the unit owner does not have the right to forbid them.

The owners must give the condo management office a key to their unit so they can enter the unit for maintenance when the owner is not home. The owners are not free to change the lock or to add a second lock to the door without permission and giving the manager a key to those new locks.

The right to entry is allowed in an emergency; that is whenever there is immediate danger of injury or damage to the common elements or other units. No prior notice is required.

When prior notice is given the superintendent and/or contractors can enter your unit for the following:
Treating the unit for vermin infestations.
Annual fire alarm testing.
Inspecting for dripping taps and running toilets.
Entry to get at the exclusive use balcony for safety inspections.
Regular fan coil servicing.

5. There's no condo police
There is no central authority that rules over the 11,000 or so individual condominium corporations in Ontario. Each one has a different style of management and owners who have different income levels, life styles, expectations and wants. They all make their own rules and have different standards of enforcement. So be sure to buy in a condo that best fits your beliefs on what communal living should consist of.

6. Disputes are expensive
If you cannot work out your issues with the board, it may cost you dearly if they call in the corporation's lawyer. All condo disputes may go to mediation, arbitration or to the courts.

Fit in or get out
If you find that these rules are too restrictive or the fees are too high, and you cannot persuade the majority of owners to change them, it may be best to sell your unit and move out.

Is a Homeowner’s Association right for you?
Debt Free Guys
By John Schneider
07 May 2014

We moved into our condo seven years ago. We were very excited, as this was our first home purchase; it was a blank canvass; it was below our budget and met our architectural aesthetic. Another reason why we were so excited was because we bought into a condominium. Neither of us particularly loves yard work, painting and fixing things. David’s handy, but I’m not. I led a cushy life when it comes to home repairs and maintenance and it’s not fair for David to do it all. So, naively, this is one of the reasons we bought into a condominium with a homeowner’s association (HOA) and a property management company. We thought that among all of them they would handle most home maintenance issues.

We had a rude awakening. We quickly learned that too many people who lived in our building at the time assumed that it was always someone else’s job to take care of things. The building looked tired and run down. The reserve account had a significant negative balance. The board at the time was highly dysfunctional. Our new home needed a lot of help and we weren’t prepared for that. Chalk that up to us not doing our homework.

Over the last seven years, we learned something pretty surprising about ourselves. When we need to get involved, we get involved. When we decided to make an offer on our condo, we knew the HOA’s finances left a lot to be desired, but we gave that a pass because of what we presumed were the benefits.

It took us eight months to get involved and it was a sharp learning curve. Because of the mismanagement of the board at the time, David, another guy in our building and I followed the required steps to have the sitting board president removed. David and our partner in crime each took a position on the board. Because of being in financial services, David became the treasurer. After his three year term plus some months, I was nominated to the board as treasurer for a three year term.

Over the last seven years, we turned the finances around. We increased the reserve balance by 84 percent and made the operation account operational. We managed several major projects that included resurfacing the parking lot and renovating the lobby and rooftop pool and patio. Units in our building started to appreciate even before local and national real estate increases.

Some of the criticism of HOAs is that they can be too stringent with rules and regulations, particularly with individual unit’s design and style. HOAs can be too aggressive with obtaining homeowner dues. While some of this criticism is fair, there are often multiple sides to every story.

Our building has over 100 units and about 300 people associated with the building at any given time. This includes owner-occupants, renters and landlords. That’s 300 different personalities, 300 opinions, 300 intentions and 300 backgrounds.

Through our experiences, we’ve learned what to expect from an HOA and what not to expect from an HOA. We’ve learned who is right for an HOA and who is not right for an HOA. HOAs justifiably receive a lot of criticism, but there’s a lot that’s expected of them and they are managed by volunteers with professional and personal lives.

Every association member has an opinion about their HOA board, but often only a handful will volunteer their free-time to be on the board. Most of the rules that are enforced are rules that were voted on and approved by a majority of members of the association a long time ago or the vote was made by the board in a public hearing. To change HOA bylaws and declarations is costly due to attorney’s fees.

HOA board members have a fiduciary responsibility to the HOA. To not enforce the by-laws, declarations and rules & regulations of the HOA can be considered grounds for breaching that responsibility. Therefore, HOA boards can’t simply pick and choose the rules they wish to enforce.

What HOAs are
HOAs are non-profit “common-interest-developments”. That is they are a voluntary grouping of individuals with shared property ownership. HOA boards and management companies manage common areas and are responsible for maintaining the value of the HOA, which includes bank accounts and property values.

The benefits of living in an HOA include getting more for your money. For example, many people can’t afford their own pool if they were solely responsible for it. With a shared property, more people can own a pool. Granted it’s shared with others, but it’s still a private pool. HOAs often alleviate regular home-owner responsibilities for common areas, such as painting and repairs, shoveling sidewalks and maintaining grounds.

What HOAs are not
HOAs are not your mom and dad. Just because you live in an HOA doesn’t mean you can use common areas without cleaning up after yourself. Just because there’s a company to clean and mow the grounds, doesn’t mean you don’t have to clean up after your dog. Just because there is a cleaning company, doesn’t give you have the right to spit your gum out in the hallway.

HOAs are not free. “Shared expenses” does not mean “no expenses”. As we mentioned, when we moved into our building the finances were a mess and the building was run down. Painting, cleaning, remodeling and restructuring were necessary, but there was no money to pay for all the necessary work. If anything was going to be done to protect or improve property values, people needed to work up a sweat or write a check.

The confusion comes when people think the HOA will pay for it. Well, the HOA is you. The cost to perform necessary maintenance or upgrades comes from the people who voluntarily join the HOA. If you’re not willing to pick up a brush or donate a Saturday, be prepared to write a check.

Our building is currently considering necessary, but major, invasive structural improvements to the tune of about $3 million. Our reserve account is stronger today than it was years ago, but because of the mismanagement of the reserve account years it doesn’t have adequate funds to finance this project. We were surprised to find out that some people were surprised to find out that they would have to fund this project with their own money. They thought the “HOA was going to pay for it” like the HOA is Daddy Warbucks. This change in perception has ironically changed some people’s opinion of whether or not this project is necessary.

Who’s right for an HOA?
An HOA is great for people who want to and are comfortable with sharing the benefits and expenses of a shared community. HOA’s are great for people who want to contract out certain homeowner responsibilities, such as property maintenance and repairs. People who want certain amenities, but can’t afford them on their own should consider an HOA.

Much like neighborhoods across the country, HOAs provide a sense of community. Now that we’ve turned our HOA around, we have regular building parties and other community events. We have new tenants who have breathed new life into the building and it’s great to watch the building evolve.

Who’s not right for an HOA?
HOAs are not good for people who neither want to get involved nor are willing to pay for what’s necessary to maintain the property. People who would be inclined to neglect their individual home because they don’t want to or can’t pay for maintenance and repairs should not consider an HOA as a “cheaper” option. People who want a free-ride should not consider an HOA.

People who need all the control or don’t like to involve others in the decision making should not consider an HOA. HOAs require flexibility, negotiating and partnering. It’s a democratic process for something very personal.

As with anything, there are positives and negatives with being a part of an HOA. Weigh the pros and cons and thoroughly research any HOA you consider. You don’t want to have buyer’s remorse on a several thousand dollar purchase.

Ultimately, though, understand that an HOA isn’t a cheaper alternative to an individual home. Believing this could be a costly mistake in the long run.

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