What Condo Fees Pay For When You Downsize to a Markham Condo

The short answer

If you are selling a house and looking at condos in Markham, the first number you will see on a listing is the monthly fee. Condo fees in Markham are not set by the city or by a listing agent. They come from the budget of the condo corporation that runs the building. Ontario law decides much of what that budget must include.

The Condominium Authority of Ontario (CAO) says condo fees, which the law calls common expenses, are used for maintaining the common elements, contributions to the reserve fund and important services such as cleaning, building maintenance and condo management. This guide explains each part so you can read a fee as a bundle of costs rather than a single number.

It is general information, not legal advice. Your real estate lawyer should review the documents for any condo you are considering. For the wider picture of moving from a house to a smaller home, see our Markham downsizing guide.

What are common expenses?

The Condominium Act, 1998 defines common expenses as the expenses related to the performance of the objects and duties of a corporation, plus all expenses specified as common expenses in the Act, the regulations or the declaration. The declaration is the founding document of the corporation, so what counts can differ between buildings.

The CAO lists what fees may pay for:

• Maintenance of the common elements, such as standard elevator repairs and cleaning
• The cost of the condo manager or management service provider
• The corporation’s insurance policies
• Services such as garbage and snow removal, landscaping and security
• Contributions to the reserve fund

Common elements are the parts of the property that owners share, such as the parking garage, hallways, lobby, recreation centre and elevators. Because the list depends on the declaration and the building, two condos can have quite different fees for reasons that have nothing to do with the unit itself.

How is your share calculated?

Section 84 of the Act says the owners contribute to the common expenses in the proportions specified in the declaration. The CAO explains that each unit is allocated a percentage, which may vary with unit size. The calculation the calculation multiplies the annual budget by your unit’s percentage.

The CAO gives a simple illustration: a $1,000 monthly budget multiplied by a 5 percent share comes to $50 a month for that unit. That is only an example of the method, not a typical fee.

Two rules from section 84 are worth knowing before you buy. An owner is not exempt from contributing even if they have waived the right to use the common elements or if the declaration, by-laws or rules restrict their use of them. So a pool you never swim in is still part of the cost of the building.

Section 84 also says a common surplus is applied against future common expenses or paid into the reserve fund. It is not distributed to owners.

What is the reserve fund?

The reserve fund is where a condo building pays for the big, infrequent jobs. Section 93 of the Act requires the corporation to establish and maintain one or more reserve funds and says a fund is used solely for major repair and replacement of the common elements and assets. The corporation collects contributions from owners as part of their common expenses, so part of your monthly fee goes into it.

The Act sets a floor for new corporations. Until the corporation conducts a first reserve fund study and implements a plan, the contribution is the greater of a prescribed amount and 10 per cent of the budgeted common expense contributions, not counting the reserve fund. After that, the contribution is the amount reasonably expected to provide enough money for major repair and replacement, calculated on the expected costs and the life expectancy of the common elements and assets.

Interest and other income earned on the fund stays in the fund.

What does a reserve fund study involve?

Section 94 requires the corporation to conduct periodic studies to decide whether the money in the reserve fund and the contributions being collected are adequate for expected major repair and replacement costs. The study must be done by a person of a prescribed class who has no affiliation with the board or corporation that is contrary to the regulations.

The CAO describes three classes of study:

Class	What it involves
Class 1	A comprehensive study with a physical examination, a records review and a projection of at least 30 years
Class 2	An update with a site inspection
Class 3	An update without a site inspection

A new corporation completes a Class 1 study within the first year after the declaration and description are registered. After that, the CAO says Class 2 and Class 3 studies alternate at least every three years.

Once the board receives a study, section 94 gives it 120 days to review it and propose a plan for future funding of the reserve fund. Within 15 days of proposing the plan, the board must send owners a notice with a summary of the study, a summary of the plan and a statement of where the plan differs from the study. The CAO notes that adequate funding may require the board to increase contributions to the fund.

How can condo fees change?

Your fee is a share of a budget, so it moves when the budget moves. The sources we reviewed do not publish a standard rate of increase. We will not guess at one. What they do show is the mechanisms that can push the number up:

• A reserve fund plan that raises contributions, as described above
• Higher costs for the services and maintenance the fees already cover
• Special assessments, which are a separate one-time charge

The CAO says a special assessment is an extra one-time charge added to common expenses, used for shortfalls such as unforeseen major expenses, under-budgeted costs or litigation. It also says boards can impose them without owner approval. Owners pay using the same percentage formula as regular fees.

The CAO also notes that corporations can add chargebacks when an owner causes an expense.

What happens if fees go unpaid?

Section 85 of the Act gives the corporation a lien against the unit for unpaid common expenses, plus interest and reasonable legal and collection costs. The lien expires three months after the default unless the corporation registers a certificate of lien in that time. This is one reason the status certificate matters: it discloses whether the current owner is behind.

What should you read before you buy?

Start with the status certificate, which sets out the unit’s common expenses, any default and the reserve fund position. We cover its contents, the $100 fee cap and the 10 day deadline in our status certificate guide, so we will not repeat them here.

Beyond that, a practical reading list for a downsizer looks like this:

1. The current budget, to see what the fee actually pays for in that building
2. The latest reserve fund study and the plan the board proposed, to see whether contributions are planned to rise
3. The declaration, to confirm your percentage share and what counts as a common expense
4. The status certificate sections on special assessments and legal actions
5. The rules on pets, rentals and renovations if they affect how you plan to live

Ask your lawyer to review all of it while your offer is still conditional. If you are weighing a condo against other ways to downsize, our comparison of a bungalow, condo or townhouse walks through the trade-offs.

Where to look in Markham

Condo buildings in Markham sit in several parts of the city. The corporation, not the neighbourhood, sets the fee. You can browse what is for sale on our condos for sale page. Our Downtown Markham guide covers one of the areas where condo living is common.

Next steps

Before you view a condo, decide how much monthly cost you are comfortable with in total, then ask for the budget, the reserve fund study and the status certificate through your lawyer. If you would like help comparing buildings, contact us.