How High Should My Condominium Fees Be?

SKRealEstateLaw Condo Blog
“$450 bucks a month for my condominium fees? How is that even possible?  My best friend has a condo that is the same size, and pays $200 a month!  Someone has to be mismanaging money.”
When clients come into my office to review condominium documents, there is almost universal outrage about condominium fees.  They are kind of like property taxes, in the sense that no matter the amount, they always seem outrageous.  That being said, there are ways to assess whether the fee being requested is fair in the context. 
Factors to Consider in Your Analysis
I have seen some suggestions for an reasonable fee estimate based on cost per square foot, but condos are just too different from development to development to have such a generic reference point.  However, it would be an interesting research project to assess what some reasonable estimates would be for our city based on type of building, and size.  
Until that work is done, the best way to assess is based on the value you perceive from the amount you are paying.  I know that sounds ambiguous, but these costs are fairly condominium specific. Some of the factors below will help break down that analysis.
The Services Delivered
The types of services can vary dramatically from condominium to condominium.  The most basic service is property management and routine maintenance, but there can be so much more than that.  Snow removal, lawn maintenance and gardening are common. Concierge and security services are all becoming more and more common.  In other cities, we see educational and fitness classes and excursions planned for residents.  The cost difference between a bare bones condominium and full service condominium can be dramatic.
What is Included?
The types of utilities and other regular monthly costs provided by condominium corporations can vary as well.  Water, power, heat, cable, insurance may all be billed individually or to the building as a whole.  Depending on the type of condominium project, some or all of the maintenance to the building may be an individual or corporation responsibility.  A bareland condominium unit with a self contained bungalow on the property would likely cost less in condominium fees, but would cause the owners to be responsible for significantly more.   
Personal Experience
If you are in the business of lawn care or snow removal, you may be able to look at the amount being spent on those line items and assess if the funds are being spent wisely.  However, if you know of a cost savings opportunity, let the condominium corporation know, especially if you buy into it.  Most boards would be happy to hear ideas on how to lower costs and charge less.  They are even more interested if you are willing to spearhead some volunteer efforts to do certain work for cheap or free. 
Things to be Wary Of
All of these things are ‘flags’.  They are items that should receive some additional diligence, but not necessarily a deal breaker.
Extremely High Reserve Fund Contributions
With changes to legislation requiring that reserve fund studies are required every 5 years instead of 10 years, a lot of condominiums are finding out that they have underfunded their reserve fund.  I have heard of contributions doubling or more in recent months.  If that is the case, it isn’t fair that you are paying for unfunded capital repairs.  Make sure your purchase price reflects that.
(Please note:  I do recognizing that I am not giving you a range, but expecting you to know what ‘extremely high’ means.  I’m kind of a jerk like that. )
Developers’ Budgets
Developers of condo projects will usually include budgets in their sale documents, and an estimate of the condo fees to be paid by the purchaser.  That estimate means next nothing. 
There is no cost to a developer to be wrong on their budget estimates for condominium corporations other than a reputational cost.  Other provinces have penalties in place for developers who underestimate their budgets, but no obvious remedy exists in Saskatchewan for a deficit. 
While some may attribute this to an unfair marketing ploy by developers, in many cases, the estimates appear to be done in good faith. To be fair, each development is fairly unique, and the marketplace changes for the cost of service delivery.  Accordingly, it is not unusual to see condo fees rise in the few years following the start of a condominium project.  
Consistent Operational Deficits
Financial documents can be difficult to get much useful information from at times.  However, if you see consistent deficits with a condominium corporation, it is a good sign to delve further into them.  It could be that it is a one off occurrence, and that happens on occasion.  It could be that the board is artificially keeping the condo fees suppressed, and using other funds (like the reserve fund) to pay for operational expenses.  If that is the case, the reserve might have taken a significant hit over the years, and not on capital expenditures.
Mixed Use Space
This term can be used to refer to mixed commercial and residential development.  Some condominiums have retail or business space in part and residences in a separate part. In those cases, it is important to ensure that any of the costs are fairly allocated between each group.  If there is one meter for all water usage, it might not be.  You may be subsidizing the restaurant’s usage.
It can also refer to mixed types of residential buildings.  Some condominium plans have apartments, duplex and stand alone bungalows all together.  It is important to review the fees to see if a fair allocation is made on their respective use. 
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