Did you know that the number of transactions involving a condominium unit across 2024 increased by 21% compared to 2023? And one thing is certain: buyers of these condos are increasingly informed and vigilant. Still, some questions remain. For instance, one we hear often is: Are we paying enough in condo fees? Stay with us as our condominium specialists take a closer look at this important topic.

Before asking whether we are paying enough in condo fees, it’s important to first establish what these fees are and what they are used for.

Condo fees, or common charges, are calculated based on the expenses necessary for the maintenance and management of the building. These fees must cover a wide range of items, such as building and liability insurance, the self-insurance fund for emergencies, utilities for common areas, administrative costs like banking and accounting fees, building maintenance and repairs, and of course, the reserve fund.

Some of these expenses are easier to determine since they are recurring and predictable. For example, insurance premiums and banking fees are set in advance, which means no surprises there. They are then factored into the calculation of condo fees according to each co-owner’s share. But if we want to truly determine whether or not we are paying enough in condo fees, we can’t rely solely on these figures—we need to account for all costs related to building maintenance and condominium management.

And this is where the reserve fund study becomes essential!

A reserve fund study identifies the annual amounts required to eventually replace the various components of the building. Based on industry standards, professional assessments, and their expertise, inspectors determine the remaining lifespan of each of these components.

As for the costs associated with maintaining and replacing them, that task falls to the estimator, who establishes them according to industry standards.

With this information in hand—future building needs combined with past expenses—the condominium board or property manager prepares a forecast budget. This budget determines the total amount the board must collect monthly from co-owners to meet the building’s needs. That amount is then divided among the co-owners according to their shares, which results in the condo fees!

As you can see, calculating condo fees is far more complex than the simplistic “5% rule” that has unfortunately haunted the condo world for far too long. In fact, this myth is largely responsible for the introduction of Bill 16, which now requires all condominiums to carry out a reserve fund study every five years.

So, if you need a more accurate calculation for your condominium, don’t hesitate to reach out to our condominium specialists

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