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This article will address the two major categories of homeownership – Condominium and Freehold. The aim is to dig deep into these two ownership types and describe the differences and what each one has to offer to make an educated buying decision.
A condo property can be a high rise multi-level condo, a low-rise condo, 2-story or 3-story Townhouse condo, Semi-Detached Condo, or Detached condo complex. In the low-rise condo setup, you do not own the land on which the unit is built and any common areas outside your unit.
Here the condo owners form a Condo Corporation or a Homeowners Association (HOA), where unit holders elect members who provide governance to the corporation. There are by-laws created for the condo corporation in a document called the Condo Declaration. These are a set of rules which advice on a variety of topics, like pets allowance, age restrictions, exterior aesthetics, usage of amenities, condo elections process, renovations, rental caps, etc.
What is included in Monthly Maintenance Fees
The common areas upkeep, recreational amenities, parking areas, landscaping, snow removal outside the units, HVAC systems, etc are maintained by the Condo Corporation in the form of monthly maintenance fees. This fee is proportional to the size of the unit and the age of the condo.
What is a Status Certificate
Whenever you purchase a Condo Property it’s vital to get the Status Certificate reviewed by your lawyer. Status Certificate is a report on the current state and financial hygiene of Condo Corporation. Also, it is an opportunity for you to go through the by-laws of the condominium and determine whether it is a good fit for your needs.
Things to Review in a Status Certificate
1) Healthy Reserve Funds – This is a pool of money which is available to the corporation for any substantial repairs they might encounter, sufficient reserve funds
2) Special Assessments – Any significant repairs to be done in the complex, this is important as this might have a direct relation to the increase in the monthly contributions from unitholders.
3) Legal Proceedings & Claims – Any pending litigation or lawsuits on the condo corporation, as they might increase the maintenance fee if the judgment is not in their favor.
4) Insurance Coverages – Whether there is enough insurance coverage to take care of the condo corporation for any unfavorable results from litigation.
5) Common Element Fees – Whether the unit has paid-up fees or there are arrears due to be paid to the condo corporation. Also, the lawyers would check what exactly does this cover and is there any increase expected in the monthly fees in the current fiscal year.
The offer which you would put for a condo property would be conditional to get the Status Certificate Reviewed by Solicitor and your own due diligence before making the deal firm.
Advantages of a Condo:
1) Common Amenities – The presence of standard amenities like gym, swimming pool, media room, conference rooms, tennis courts, etc become a part of a lifestyle for which a conventional homeowner would need to pay.
2) Location – Due to their relatively economical price point, the purchaser can have homeownership in dense in-demand metropolitans, where freehold property is out of reach.
3) Upkeep – Condos are generally smaller in sq ft size and relatively easy to manage and general maintenance, there are no outside elements to maintain as they are taken care of by the condo corporation.
4) Ease of Renting – Condos are generally more quicker to rent as by design they are in the high-density metro cores and working professionals gravitate towards cutting their commuting and having a good lifestyle, especially for the period when they are renting.
When you get into the ownership of a freehold property, you own both the home and the land on which it is built. The name comes from the fact that it is ‘free from hold’ of any entities besides the legal owner. The owner here for a freehold property is solely responsible for any updates or upkeeps needed in the house inside or exteriors. Any changes to the structure need to follow the local City bylaws and permits.
The owner of a freehold property is solely responsible for any updates or upkeeps needed in the house interiors or exteriors. Any changes to the structure need to follow the local City bylaws and permits. The garbage collection and snow clearing is performed by the City.
Advantages of a Freehold:
1) No Extra Fee – You pay only your mortgage and not any monthly maintenance, or any service charges on top of it.
2) More Control – You can be sure that your monthly expenditure will not increase in the future with any extra fees, giving more control over your budget.
3) More Rights – Freehold property also means that there are no controls in what you can do with your home: keeping pets, tenancy, building additions inside and outside curb appeal, etc.
4) Return on Investments – Due to a higher sense of ownership, they tend to show a better rate of growth over the period.
For more such write-ups to assist in Buying and Selling please refer to our blog section.
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