How are your condo maintenance fees calculated?

by JJ Hiew

Originally posted on Medium. Note that this post is for informational purposes only and may not reflect your condo.

First-time condo buyers and even long time owners are often confused by maintenance fees. “What do my maintenance fees pay for?” and “How are my fees calculated?”. With annual budget package distribution either fast approaching for some corporations or something that is an upcoming agenda item in the months or year to come. We thought it might be helpful to provide a brief summary to address the above questions.

Maintenance fees go towards two major components: the annual operating expenditures for the condominium corporation and the condominium’s reserve fund.

OPERATING EXPENDITURES
These are the regular costs for running the condominium corporation each year. Not all condo corporations are built alike and will have different items that contribute to the operating expenses. These expenditures can be broken down into the following categories:

  • Utilities (water, hydro and gas)
  • On-site Staff Payroll (superintendents)
  • Contracts (property management, security, landscaping & snow removal, garbage pick-up, elevator maintenance, etc.)
  • Amenities and Recreation (gym maintenance)
  • Housekeeping & Maintenance (cleaning supplies and maintenance of all common areas)
  • Electrical (electrical supplies and maintenance of common areas)
  • Exterior Repair and Maintenance Expenses (Roadways, building envelope, superstructure)
  • Mechanical Expenses (HVAC, generators, air handler, boilers, condensers etc.)
  • Property Taxes (the corporation’s taxes, not individual units’)
  • Insurance (Condominium Insurance and Premiums)
  • General Administrative Expenses (Consulting, Legal Fees, Office Expenses, Audit Fees etc.)

RESERVE FUND CONTRIBUTIONS
The Condominium Act, 1998, requires all condos to build a special fund to be “used for replacement and non-routine repairs of common elements and assets of the condo”[^1]. A Reserve Fund Study must be carried out at least once every three years by certified professionals, usually Engineers.

The purpose of the study is to examine all the systems (e.g, heating) and other physical aspects (garage, balconies, windows) and give a reasonable expectation as to when they will need to be replaced or have non-routine repairs and how much this will cost at that projected time in the future.

The engineers present the results of this study to the board along with a fundraising plan.[^1]

Many people think that their maintenance fees are calculated based on the size of their unit. That’s a common misconception. Your maintenance fees are actually calculated based on your shares in the Corporation.

THE MAINTENANCE FEE CALCULATION
The Operating Expenditures plus the Reserve Fund Contribution equals the Common Expense Contribution (CEC). Each owner then pays a percentage of the CEC based on their % of ownership in the Corporation. You can find the percentage breakdown of shares in your condo declaration.
Here’s an example with some math:
Let’s say the CEC for this year is $1,000,000 and you own one suite, a parking space and a locker. Your declaration might show your total shares in the Corporation at 1%.
Your annual maintenance fees = $10,000 ($1,000,000 * 1%)
Your monthly maintenance fees = $833.33 ($10,000 / 12)

Items like utilities may be out of the condo corporation's control, whereas other items such as outdoor maintenance may vary from year to year.

Need to distribute your condo's annual budget package? Contact us today to find out how we can help.

[1]Reference