Is condominium a style of architecture?

No!!  Any land lot and buildings that offer the potential of private spaces with common-property support can, in theory, be condominiumized. Residential condominium is the most prevalent form. However, commercial, industrial, and recreational applications are becoming increasingly popular.

Do condominium purchasers receive a land title?

Absolutely. Condominium owners possess fully registered, mortgagable titles. Of course, they also pay their fair share of taxes.

What's the Condominium Corporation?

When a condominium plan (and/or declaration) is deposited with a land titles office, an administrative body is automatically created. Membership in the condominium corporation (or council) is made up of the owners of individual units. Its purpose is the management of the affairs of the condominium in the best interests of all owners.

Condominium corporations (or syndicates in Quebec) are created under the various condominium statutes upon registration these documents. They have many of the artificial-person, ongoing-existence features of business corporations including authority to represent the owners in matters of community interest They can sue and be sued. They do not, however, enjoy the limited liability of commercial counterparts.

Who runs the condominium?

Every condominium must have an elected executive, the Board (or Council in BC). Charged with enforcement of the community's by-laws, the board exercises its powers in performance of the corporation's responsibilities as outlined in the respective condominium legislation. Unit owners themselves are, however, the ultimate authority, in that they elect the Executive.

Do By-Laws apply to every owner?

Yes!!  By-laws are considered a contract to which every unit owner is an informed and willing subscriber. They establish a detailed framework for operating a project. And, as a contract between unit owners, the condominium corporation and the board, they define the powers, rights and responsibilities of all parties.

What is normal By-Law content?

By-laws deal with

Duties of the unit owners (typically, unit and privacy area maintenance, compliance with rules and regulations, payment of contributions, etc.);

Duties of the condominium corporation and its board: i.e., managing the common property; maintaining, repairing, and replacing service components; collecting unit-owner contributions to operating costs; establishing and maintaining replacement reserves; insuring units and common property; etc);

Powers of the board; (i.e., to borrow funds; invest contributions; assign privacy areas; make rules and regulations; hire staff and professional services; etc);

Composition of, election to, and removal from the board;

Convening and conduct of meetings; voting procedures; appointment of managing agents; maintenance of records; financial statement preparation and delivery; etc;

Enforcement of by-laws and collection procedures; and,

Standards (behavioral and architectural) regarding noise, signage, pets, laundry, storage, parking, electrical and mechanical systems, etc.

What are some of the duties of a Board?

Duties include:

Obtaining and maintaining insurance on buildings, common facilities and insurable improvements to full replacement value;

Keeping the common property and other assets in a state of good and serviceable repair and maintenance;

Complying with notices and orders of any local or public authority;

Establishing a fund for administrative expenses sufficient for the control, management, and administration of the common property;

Creating a reserve (proposed revisions will mandate);

Raising operating and reserve funds necessary by levying contributions on owners in proportion to unit factors.

Can I mortgage my unit?

Of course. Your unit and its proportionate share in the common property are included under a single and separate land title. It's a mortgagable (and taxable) estate in land just like traditional houses.

Condominium will, however, usually provide for the following:

1) Special obligations of the condominium corporation regarding insurance i.e., the duty to insure for replacement value;

2) Failure to make prompt condominium fee payments constitutes default;

3) Failure to comply with the Act and the By-Laws also constitutes default; and

4) Full or partial assignment (if necessary) of the borrower's voting rights.

How much down payment do I need?

Today, if the purchasers qualify, most condominium homes can be bought with just 5% down. However, banks and trust companies have limits to the amount they may lend without the security of mortgage insurance.

Federal legislation states that this amount cannot exceed 75% of the lower of the purchase price or appraised value. Applicable to both condominium and non-condominium properties, this standard uninsured loan is referred to as a conventional mortgage.

What's a high-ratio mortgage?

If a purchaser needs an institutional mortgage greater than 75%, mortgage insurance protecting the lender against loss from default must be purchased by the borrower.

High-ratio mortgages are now available up to 95% of the purchase price. However, there is a fee of up to 3.75% charged to cover the associated risk.

The mortgage insurance fee is:

1) computed as a percentage of the loan, 2) collected by the lender from the borrower (either directly or by adding it to the mortgage), and 3) paid to the insurer who contracts to indemnify the lender.

Where and when do I go to apply for a mortgage?

It's always wise to consult the mortgage staff at your financial institution, or an independent mortgage broker, before becoming involved in the search and offer stages of condominium buying. It's a good way to become acquainted with the purchase process and acquire a better understanding of how much you can afford. Qualifying procedures for a condominium mortgage are similar to those of conventional homes. The property is appraised, loan-to-value criteria are applied, your ability to repay the loan is verified, and your credit history is evaluated.

What are the GDS and TDS ratios?

The Gross Debt Service ratio (GDS) focuses on the property. At present, payments for mortgage principal and interest, property taxes, heating , and 50% of the condominium fee must not exceed 32% of family gross income. The Total Debt Service (TDS) ratio contains the same components as the GDS, but adds other outstanding debt payments (automobile, credit cards, etc.). This ratio must be less than 40% of family income.

What are the Developer Disclosure Documents?

Although it varies between jurisdictions, purchasers of new and conversion condominium units are often protected by disclosure requirements.

Developers are typically required to provide extensive documentation. This includes the condominium plan, declaration, by-laws, management and recreational contracts, and any lease or mortgage affecting the property.

Purchase agreements may also require descriptions, drawings, or photographs of all interior and exterior improvements to be completed, plus any equipment to be supplied. Statements of the budgeted unit contribution (condo fee) and the amount and computation basis of the assigned shared-ownership factors are usually also required .

What about Resale Disclosure?

The various Real Estate Boards frequently incorporate these and other purchaser protections in their standard Purchase and Sale Contracts.