The Factors That Go into Determining Your Condo Fees
We all like knowing that things are being handled fairly. It goes all the way back to fighting with our siblings over whose turn it was to use that one red plastic cup at lunchtime, counting the days of the week to make sure your diabolical little brother wasn’t trying to pull a fast one on you.
The same goes when it comes to condo fees. Everybody is typically happy to pay their fair share, but no one wants to pay more than they ought to – and fair enough! It’s no fun pulling extra weight for other folks, especially regarding premiums and payments.
That’s why we get it when condo owners come to us asking about their fees. The way these fees are determined can be confusing enough on its own. When you start asking around to your neighbours, though, and realize that you might be paying less than some but more (or even much more!) than others, you might rightfully start to wonder: hey, what gives?
Well, we’re here to tell you precisely what gives as we take a moment to dig into how condo fees are structured. We’ve got Catalyst Condo Management’s Account Manager and number-cruncher extraordinaire, Fabrice Vermeer, to walk us through the tricky bits.
Five Things to Know About Condo Fees and Unit Factors
1. Condo Fees Tend to be Pretty Property-Dependent
When it comes to the overarching why and wherefore of condo fees, they tend to be pretty representative of and specific to the properties they represent – as Vermeer began by explaining to us.
“The first step toward determining a condo fee structure is looking at the needs of the building and calculating that total,” Vermeer told us. “Things like cleaning, landscaping, interior or exterior repairs, window cleaning, eavestroughs, insurance, reserve fund contribution, amenity upkeep – all of these range in scope and scale depending on your building and its needs, and all of these details are broken down by the condo board in the annual budget and ultimately covered by a community’s condo fees.”
2. Unit Factors Determine Individual Unit Fees
That all makes sense so far, but why do some residents pay more than others in the same building when it comes to condo fees? It all comes down to how those totalled-up fees are divvied up, according to Vermeer – and there’s a method to the madness once you get an idea of how it’s all sorted out.
“Once a condo corporation gets a sense of how much funding it needs to cover its annual budget, that big grand-total number is taken and divided by unit factors,” Vermeer explained.
Hold on a second. Unit factor? That is to say, condo fees aren’t divided evenly across units, with each owner owing the same as the next. That’s right, according to Vermeer – and the reasoning makes sense when you think about it.
3. It All Comes Down to Unit Factors
Vermeer mentioned unit factors in her earlier explanation – but what exactly is a unit factor? Well, it’s just a way of quantifying ownership in condo communities wherein units can vary wildly from one door to another.
“The unit factors for a whole building always add up to 10,000, no matter what,” Vermeer told us. “Those numbers don’t change, and we don’t make them up – although some people seem to be convinced that we do! The unit factors for each unit are already determined and divvied up during the building process – we get them from Alberta Land Titles and don’t have any influence over them at all. We promise!” Vermeer ends off with a chuckle.
So, we know that unit factors influence how condo fees are broken down – but what goes into determining how those unit factors are sorted out?
4. Not All Units are Built Equal
When it comes down to it, not all units are built equally. Some are larger and account for more of a condo’s physical makeup than others, so those units tend to come part-and-parcel with a larger share of unit factors than a smaller unit might – a lot larger, in some cases, depending on how those percentages shake out.
“Unit factors are typically based on the unit’s square footage,” Vermeer continued. “So, if one unit is even slightly larger than another, it could have a big impact on the unit factors. This is especially true when factoring in how many other units there are, how much bigger your unit is comparatively, and if there are other bigger units to help balance things out.
“In the end,” Vermeer summarized, “those condo fees are calculated by saying okay, your unit is worth X number of unit factors, and so based on the total contributions, your unit factor divided by 10,000 times that grand-totalled annual budget is how we come up with your annual condo fees owing.”
5. Other Things Unit Factors Influence Besides Fees
It sounds like a bummer to have an advantage in a number of unit factors in a condo community, but some positives come along with holding a larger number of factors to consider. First, of course, there’s the intrinsic benefit of having more physical living space compared to smaller units with fewer unit factors –this also influences this cryptic measurement.
“If there’s a vote that goes on at an AGM, not all votes are equal,” Vermeer advised. “The count is based on unit factors. The same goes for when new bylaws are passed via special resolution: that goes by unit factors, too. So one person’s vote may be worth more than another person’s based on unit factors, which makes sense, especially when you consider multiple unit ownership.”
Thanks as always for taking the time to talk facts and fees with us, Fabrice – we couldn’t appreciate it more! So get in touch with us today at Catalyst Condo Management to learn more about what you’re paying for your fees and why. We’re always happy to chat and to help shed light on where your money goes as a condo owner!