Do you know the Financial Structure of a Condominium?
What determines your Maintenance Fee?
The Condominium Financials includes the operating budget, surplus of funds, contingency funds and the reserve funds of the Corporation. The maintenance fee for each unit is assessed in relation to the square footage of the unit, parking and locker (if included). The Budget will include all of the expenditures based on a fiscal year of operations.
The year end is determined by the date of registration of the Condo Corporation. The Board of Directors must ensure that the Corporation receives enough monthly maintenance fees throughout the year from each unit owner to cover the full years expenditure of operation expenditures. Reserve funds are only to be used for replacement and refurbishments in accordance with the Reserve Fund Study which is updated every 3 years. If a replacement or reburbishment has to be completed prior to their expected life term; then a percentage of the cost can be allocated to the operation budget and a percentage allowable on the reserve fund.
In the event that a Corporation has a surplus of funds; it is common for a Board to pay down the operating budget to reduce maintenance fees. In the event that the Corporation has an expenditure that cannot be claimed through reserve funds and the budget cannot withstand the expenditure; the Board of Directors can place a special assessment on unit owners to cover the costs.
Note: various expenditures and percentages plus the highest percentage of costs
- Services/Contracts 35%
- Utilities 30%
- Reserve Funds 20%
- Personnel (Superintendent); Repairs & Maintenance 15%
The Condo Budget Pie for Condominiums
The HST increased the Condo Operating Budget for the following Contracts:
- All Service Related Contracts ie. Property Management; Administation; Concierge/Security; Cleaners/Maintenance/Repairs; Superintendant/Personnel
- Reserve Funds: need the additional HST because only GST was added into the fund previous years so there will be a shortfall should there be reserve fund expenditures.
- Most Condo Corporations have had to top up their contributions to the Reserve Fund
- Cost of Utilties: all utilities are subject to HST (13% rather than 5%) as previously paid prior to HST implementation
- HST COSTS BREAKDOWN – How will the new HST affect me in Ontario?