Buying a Condo: What to Know About Condo Ownership Rights

Often boasting fantastic views and luxury amenities, condos for sale make excellent investments for first-time buyers and seasoned investors alike. But buying a condo isn't like buying a home—condo owners don't own everything around their unit, and there are additional laws for unit owners to familiarize themselves with.

There are specific differences in definitions and terms that buyers need to know in order to understand the extent of their investment. Condos can be better investments than detached homes, but the legalities of condominium ownership are very different. It pays to investigate what those differences are upfront so that you are aware of the legal requirements and financial obligations that apply to each type of housing. Keep reading to learn about what to expect when you're buying a condo, including several key factors that influence what you actually own when you buy a condo.

"The Air Space Inside" & "Drywall to Drywall": Terms that Define Boundaries of Ownership

Condominium development is a special class of common interest development, and the boundaries of individual units are sometimes defined as the "interior, unfinished surfaces of the unit's perimeter walls, floors, ceilings, windows, and doors." Although this definition doesn't specify, it is typically interpreted to include the paint or other finishes of interior walls, floor coverings and other "improvements" located within that block of airspace. For practical purposes, that includes appliances, lighting fixtures, hardware, plumbing fixtures, cabinetry, and the like, even though they are attached and function only because of their attachment to wiring, piping or building structure outside the "airspace."

Condominium ownership also includes an interest in common areas and other elements of the larger development. It is this common interest that, in some cases, is more difficult to define.

"Having an Interest In" vs. "Owning": Why Condo Owners Don't Own the Land

This concept can be confusing. Because most condominium developments are situated on property that includes a residential building and perhaps other common-use buildings and landscaped areas, there is a common perception that individual owners share ownership of the common elements. In most cases, however, individual condo owners hold shares in a separate legal entity that owns and is responsible for maintaining those common elements. Land ownership in Canada is already heavily nuanced, but condominium ownership terms add another layer of complexity.

The governing document of that entity defines the rights and responsibilities of shareholders, including the financial commitment for routine upkeep, maintenance, and repair of common property. These operational rules, corporation bylaws, and restrictions that apply to a particular development are binding. Although they can be sometimes be amended by a community vote or updates to provincial law, changes to established policies and practices can be a lengthy process.

General, Limited, and Exclusive Common Elements

It's the bylaws of any association, whether a condominium or a modern planned subdivision, that have become the guiding legal authority for owners and residents. A community association may levy dues, assess special fees, and sign contracts with third parties for maintenance and repairs to condominium complexes and common property. Within a particular condo unit, the owner is responsible for the upkeep and may make changes, including implementing space-saving design strategies, that do not impact other owners or owned property.

However, there are various types of common elements in every condo development because of its very nature. They are known as "general, limited and exclusive" common elements. It is essential to be aware of the specific language used by individual condo management associations to thoroughly understand the restrictions that apply to a specific building or condo development.

What Are Condo Fees?

Condo fees are monthly payments that cover the costs of maintaining a condominium complex. These costs can include utilities, insurance, and repairs. The fees also contribute to the upkeep of common areas, such as lobbies and swimming pools, and some fees are set aside in a reserve fund. Condo fees can range widely, depending on the complex's size and the available amenities. Every unit owner is responsible for paying the monthly fee, regardless of whether they use the amenities or not. In the case of an emergency, the condominium corporation may have to raise additional money for repairs.

How to Check Exactly What You Own

The bylaws, rules, and regulations of a particular condo corporation should explain everything a prospective buyer or condo owner needs to know about becoming an owner of a new condominium or buying a unit in an existing condominium building. It is always wise to seek legal counsel and obtain financial advice when purchasing real estate. The documentation should specify and define, in no uncertain terms, the limits of your responsibilities and the general duties and rights, including current financial obligations, that accrue to ownership of a condo in that building or development.

As a condo owner, you are also a shareholder of the corporation that governs condominium affairs, so be prepared to continue to be involved in the operational and financial affairs of the community. Buying a condo differs from buying a detached home, but for millions of Canadian citizens, condo ownership is the right decision.

Spend the necessary time and effort getting detailed information and advice you need before deciding to buy a condominium.

Here's Why Knowing Your Ownership Boundaries Matters

Although the standard picture of a condominium is high-rise buildings with amazing views, condos come in various sizes, shapes, and configurations. Resort communities that boast acres of single-story dwelling units clustered near a lake or around a golf course can be condominium developments, just as multi-use communities might offer various housing options, all of which are tied to a single condominium corporation.

Anyone interested in condominium living should investigate the possibilities throughout the provinces. It's the legal description that makes the difference. Most condo owners also share ownership of certain elements, but not all. Understanding the boundaries of your ownership is critical. Potential condo owners should know that advance research is required before buying into a specific condo development. In Ontario, for instance, there are two main types of condominiums: freehold and leasehold. Understanding the unique terms, applications and rules at the outset will prevent future disappointment or potential legal action. Potential owners should know the unique terms, applications, and requirements.

Stay on Top of the Wider Condo Laws

In addition to knowing the legalities of what a condo owner actually owns, it's also important to know the overall laws surrounding condo ownership. This information is valuable for both condo buyers and sellers. Like many things, the laws around condominiums can change, so those involved in the condo business should be sure to do their research.

A recent example is the Alberta Condominium Property Act, which came into effect on January 1, 2020. This arrived after five years of planning the legislation. It includes updated rules regarding condo bylaws, insurance, dispute resolution, reserve fund studies, and condo unit rentals.

The Bottom Line for Condo Ownership

In 2016, it was estimated that nearly two million Canadians lived in condominiums and that almost two-thirds of those residents owned the condos they occupied. There are many good reasons to embrace condo ownership, but the choice is an individual one based on many factors, including location, price and lifestyle preference. If you choose condo living, be sure to investigate your options and be aware of all the rules and regulations that pertain to your purchase, including the long-term financial obligations and the strength and viability of the condo association.