Buying a Condominium

Looking at potential homes to buy can be an exciting experience.

First, you need to figure out what you can afford and how much of a mortgage you’ll need.
Then, once you find a condominium that matches your financial and personal criteria, you’ll want to ensure that it’s well managed and in good physical, financial and legal condition.

There are significant distinctions between buying a new condominium and a previously owned, or resale, unit.

This section highlights what you need to look for, whichever route you choose.

It will also tell you how buying a condominium differs from purchasing a “fee simple” home and help you determine what you can afford and which experts to consult.

Buying a New Condominium

Developers often put new condominiums up for sale before their construction has been completed or even begun.

You may be selecting your unit from a floor plan.

This has advantages you may be able to ask for changes and risks the as-built result may differ from the plan or what you had envisioned and the completion date could be later than promised.

When considering a new condominium, you should have a close look at your unit’s specifications and the building’s plan, and other governing documents to ensure that your unit is acceptable and that you’re fully aware of regulations and the corporation’s budget.

You’ll want to find out from the developer what work must still be done on the project and check that your purchase agreement specifies a completion date and under what conditions the developer may change it. The developer should also be able to give you details about the property manager who will hold the key responsibility for the day-to-day running of the condominium.

For more information on what to look for when buying a new unit, see Tips for buying a new condominium.

Buying a Resale Condominium

When you purchase a resale unit you have the advantage of seeing what you’re buying.

It’s clear how much space you’ll have, what the layout is like, and where the common elements are.

But you’ll also want to find out about less obvious aspects, such as what steps have been taken to limit noise between units and how odors are controlled.

On the financial and legal side, you should review the corporation’s annual operating budget, financial statements, and estoppel or status certificate.

The status certificate is a package of legal documents that may include the declaration, bylaws, rules, and information about the corporation’s insurance, reserve fund, property management contract, and any outstanding judgments.

You may have to pay a fee to cover the corporation's costs of providing these documents, but it will be well worth it — so much so that you should make an offer to purchase conditional on a satisfactory review of these documents.

For more information on what to look for when buying a resale unit, see Tips for buying a resale condominium.

Special Considerations

You’ll want to be crystal clear about the following special considerations when making an offer on a condo unit:

Declaration

A condominium’s declaration sets forth fundamental information about how the condominium is organized and operated, such as the proportion in which owners are to contribute to the common expenses, and it may have restrictions on pets, home-based businesses, what can go on a balcony and many other issues. (Some provinces don’t use the term “declaration;” instead this “constituting” document is included as part of the condominium “plan.”)

A declaration can be difficult to change so you’ll want to read it over very carefully to ensure that it does not contain unacceptable terms or restrictions

Unit Boundary

Find out exactly where your unit ends and the common property begins. Is the door to your home part of your unit, for example, or is it part of the common elements?

You should have a good look at the condominium’s plan so you know precisely what you’ll be responsible for maintaining.

For more information on unit boundaries, see Where are my unit’s boundaries.

Unit Factor

Your unit factor (sometimes called “proportionate share” or “percentage of ownership”) tells you what percentage of the condominium’s common property you own.

It’s a key piece of information because it determines how much you will pay in monthly maintenance fees and sometimes your voting rights.

You’ll find your unit factor listed in the condominium’s declaration (or other governing documents, depending on where you live). Don’t expect it to be equal to your neighbor’s, but it should at least be similar to those of other units that are comparable in size and location.

Your unit factor is usually based on the size and location of your unit. Before you buy, verify what your unit factor will be with your lawyer. For more information on unit factors, see How are my voting rights determined?

Reserve Fund

A portion of your condo fees will likely go toward the building’s reserve fund. (Your province or territory may have another name for this, such as contingency fund or capital replacement reserve fund.)

A reserve fund ensures that the condominium has enough money to pay for the major repair and replacement of the common elements over the life of the building.

These may include the roof, roads, sewers, sidewalks, elevators, plumbing, and other building systems. For more information on reserve funds, see Is there enough money in the reserve fund?

Home Warranty

New condominiums are often protected by third-party new home warranty programs.

Warranty programs ensure that the condo is properly constructed and meets building specifications.

If you’re buying a new condominium, find out what is and is not covered by the warranty.

If you’re purchasing a resale condominium, find out what warranty coverage remains on the unit, if any.

For more information on home warranties, see How do new home warranties work?

Insurance

There are special considerations when insuring a condo as opposed to other forms of housing tenure.

You’ll want to check that your individual unit and the condominium corporation as a whole are sufficiently insured.

For more information on insurance, see What property or general insurance coverage should I look for?

Affordability — How Much will it Cost?

It’s important to know how much money you should set aside to purchase — and live in — the condominium you are considering.

Additionally, when you are shopping around and comparing different condominiums, it’s important to compare the purchase prices and monthly fees for each unit.

Ensure you can afford your mortgage and your new monthly expenses. Your bank, mortgage broker, or financial advisor can help you tailor your mortgage to suit your financial goals and needs.

CMHC’s online guide Homebuying Step by Step can also help you to determine what you can afford.

There are many different types of mortgages, including conventional, high ratio, and second mortgages. Take the time to discuss your current financial position and future goals with your financial advisor and be sure that you are comfortable with your purchase.

Know What you Can Afford

If you are presently renting and are looking at purchasing for the first time, here are some important points to consider when assessing what is affordable for you.

Canada Mortgage and Housing Corporation can help you to determine what you can afford with an online calculator available free of charge at CMHC’s online guide Homebuying Step by Step – Step 2: Are you financially ready?