Generally less expensive than a single-family home, a condo can also be an interesting real estate investment. That said, checks must be made on the regulations and the financial and structural health of the building. You must also be prepared to live and make decisions in a community.
The essential question
According to Mikael Lacroix, a residential and commercial real estate broker for the Sutton-Immobilier Estrie Group, affiliated with Barnes International, the most important aspect to consider before buying an existing condo is to know that being an owner in a condominium implies sharing with other owners. "When you buy a condo, you are in your own home, but not your own house. If you are aware of this and comfortable with it, you can find advantages," notes the broker, mentioning the exterior maintenance chores that you no longer have to take care of because they are taken care of by a company.
One condo, three parts
A condo is divided into three parts:
- the private part, which is often the personal interior unit ;
- the common areas, such as the outside grounds and the entrance hall, which are shared by the co-owners;
- the common parts for restricted use, such as balconies or parking spaces. Each owner enjoys his or her own space, but must abide by the rules of the building. For example, it may be forbidden to have a barbecue on your balcony or to wash your car in your parking space.
Read the building's rules carefully
It is essential to read the declaration of co-ownership, which contains the building's rules, before signing an offer to purchase. Some of these rules may not be suitable for you, such as the fact that dogs are not allowed, short-term rentals are prohibited, bicycles must be stored in a room, etc.
Check the financial health of the co-ownership
Another fundamental aspect is to check the financial health of the co-ownership. "This is often a condition in the promise to purchase and there is always a place where the buyer can consult all the co-ownership documents," says Mikael Lacroix.
Also remember to ask for the financial statements and minutes, what's in the contingency fund and whether there's enough money set aside for any major work to be done in the near future. "This is important because the condo could have voted that each co-owner take $3,000 out of their pockets to pay for the renovations without taking money from the contingency fund," says Mikael Lacroix.
"When you become a new co-owner, you would be obliged to pay that $3000 since the vote was before you arrived," he adds.
To get a clear picture of the building, including its financial statements and administration, real estate brokers ask a duly authorized representative of the syndicate of co-owners to fill out a Request for Information from the Syndicate of Co-owners (RICSO) form each time they make a promise to purchase. This necessary step to protect the new purchaser of a co-ownership has recently been supported by the Quebec government, which has passed two new laws.
Two New Laws Welcome
Bill 16, introduced by Quebec, amends condominium rules in order to better protect consumers.
"There are two important articles that are a legal revolution in condominiums because they were adopted by the National Assembly and will allow buyers to obtain useful information upstream of the transaction," says Yves Joli-Cœur, president of the Regroupement des gestionnaires et copropriétaires du Québec (RGCQ) and instigator of the condolegal.com website.
"Article 1068,1, which is not yet in force - it is expected to be in the course of 2023 - states the following: A person who sells a fraction of a co-ownership (the private portion plus the share of the common portions) must, in due course, deliver to the promisor-buyer a certificate of the syndicate on the condition of the co-ownership, the form and content of which are determined by government regulation. This text means that each real estate transaction in a condominium will require a certificate of compliance beforehand. The buyer will know, among other things, if the co-ownership is in difficulty, if there are any disputes, so that the transaction will be much more transparent.
"The second article of law 1068,2 is already in force: A person who promises to purchase a fraction may request that the syndicate provide him with documents or information concerning the immovable and the syndicate which are of such a nature as to enable him to give an informed consent. The syndicate is required, subject to the provisions relating to the protection of privacy, to provide them promptly to the promisor-purchaser at the latter's expense.
Collective liabilities
Insurance costs are added to the various condominium fees and the law now requires that a condominium have liability insurance (1 million for less than 13 units, 2 million for more than 13 units). "There is another mandatory component: the self-insurance fund, which includes the amount of the deductible in the event of a disaster in the building, but it is also necessary to have the building evaluated by a certified appraiser to verify the costs of rebuilding the building, because if it exceeds the insurance coverage, it will have to be revised upwards to ensure that it has the necessary funds," explains Mikael Lacroix.
Partial or comprehensive inspection
Before buying, you can choose to have only your private portion inspected, but you can also have the inspector check the interior and exterior common portions. The inspection can be an opportunity to find out how the building was built and whether the units are well insulated. You can also ask the neighbours about this.
Investing... and getting involved
Living in a condo requires involvement and collective responsibility, and you have to be ready to participate in the meetings of the syndicate of co-owners to make decisions, or even to become an active member to take care of the specifications.
For Agnès D., the experience was quite positive in her former triplex, where each floor was occupied by an owner. "There can be disagreements, so you have to know how to handle the art of compromise, but overall, it went well.
Isabelle M., for her part, is not ready to reinvest in a condominium. "On the positive side, it was accessible to me as a first-time buyer, but there were many negative points. It was a big building, there were endless meetings and there were often disagreements. Also, you pay for a contingency fund, but even if there is maintenance work to be done, such as painting, it can take months or even years to get it done. Also, people look out for each other, that didn't suit me at all, but when I was asked to get involved in the running of the condominium, I played along to do my bit, but it's very important to know that it's a big responsibility that's put on your shoulders."
Source : Article by Emmanuelle Mozayan-Verschaeve on the lapresse.ca on the 16th november of 2022
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