Questions and Answers
Q&A: Condo Insurance
Q: For my unit insurance, I’ve been advised to use the same broker that insures my condo corporation. That way, if there\’s a claim, the two insurance companies can’t play the “it’s the other guy’s fault” game. I have my doubts, though. Wouldn’t this be a conflict of interest for the insurance company?
A:Insurance needs for condominiums vary so you need to be very clear about what type of insurance you need, and an insurance broker can advise you on that. You need to make sure that anything that isn’t covered by the condominium corporation’s insurance policy is covered under your individual policy. An example of an area that is sometimes unclear is who is responsible for insuring windows and doors?
As far as there being a conflict of interest, whether there is one insurance company for the condominium corporation and your unit or whether you have different companies for each one, you are a beneficiary in each situation. Both insurance policies are for your benefit in one way or another. The unit policy directly benefits you whereas the corporation’s policy benefits the condominium corporation. Remember that as a unit owner you’re also an owner of the condominium corporation.
I hope that clarifies things for you. Insurance is not my area of expertise and if you need more details you can contact the insurance experts at RE/MAX Insurance at 403-252-6595 or speak to your insurance broker.
Q: When are property taxes due, and how are they paid?
A: Another question reviewed on a recent episode of Calgary Home Podcast. The question simply was, when are property taxes due and how do you pay them.
In Calgary, municipal property taxes are due to be paid by June 30th of each year. The payment on June 30th covers the entire calendar year, so you pay in June to cover January to June in arrears and July to December in advance. We also have the option of joining the TIPP program, which is the Tax Installment Payment Plan. Essentially this converts your once a year tax bill into a monthly bill.
What you need to be aware of when buying a home is that if the seller has paid the taxes for the entire year and you purchase after June 30th, there will be an adjustment where you’ll need to reimburse the seller for the taxes they have pre-paid for the time you’ll be living in the home. For example if you took possession of a home at the first of the month, on October 1st and the taxes were pre-paid for the entire year, part of the adjustments due on closing would be for approximately ¼ of the annual taxes to cover the three months from October to December.
Q: What resources are available regarding the condominium documents condition?
A: My second question featured on a recent episode of Calgary Home Podcast was in response to the episode on condominiums. This is the condition on the sale that allows you to review of the documents regarding the state of the condominium corporation before proceeding with the purchase. The question I received was asking what the review process is and what resources are available to purchasers to help.
The documents are fairly complex – they contain everything from the bylaws governing the owners of the corporation and how they are able to use and enjoy the units they own, the budget and financial condition of the condominium and reports about the structural condition of the building and condo property. If you don’t feel comfortable analyzing them yourself you can ask your lawyer to review them or hire one of a number of companies that specialize in reviewing condominium documents for consumers:
Condo-Check
Condo Document Inspection Centre
Q&A : When is the money due when buying a house?
This is in response to the last episode of Calgary Home Podcast where I talked about the offer process. The question is about deposits and when the money is due when you purchase a home.
A: Generally speaking you’ll need to make an initial deposit with your offer - just for example purposes I’ll say $5,000. This will be held in trust by the seller’s real estate brokerage and eventually go towards your down payment when the deal closes.
It’s possible to make an additional deposit at some point after the offer is accepted. What you might encounter is a deposit due after all of the conditions of the sale have been finalized.
The balance of the money is due on the closing date. This would be the remainder of your down payment, the mortgage funds, and any tax adjustments, condo contribution or home owner association fee adjustments. In practice you’ll probably need to write a cheque for the balance of your down payment to your lawyer ahead of time. The lawyers will hold the money in trust until the closing date and release the funds once the legal title for the property is transferred into your name.
Q&A: My lease is up in 6 months, when should I start house hunting?
Q: I have a lease ending in about six months. How do I get ready to buy a place and when do I start?
A: You can start right away to familiarize yourself with the market and think generally about what type of home you’d like to buy. For example, do your budget and lifestyle lead you more towards a condominium or a single family home? What areas of the city or particular communities do you prefer? Consider what amenities it’s important for you to be close too and what level of access to major roads, LRT and buses you might need. Think about creating a custom home search for properties that match these requirements so you have an idea of pricing in the neighborhoods you like.
It’s not too early to speak to a mortgage agent regarding your options for buying. Find out as early as possible if you have any blemishes on your credit report so you can get them cleared up and have a clean mortgage application when the time comes.
When does your lease expire? Most properties are available with closing/possession dates ranging from 30-90 days from the time you make an offer to purchase. You should being looking at homes when you have 2-3 months remaining on your lease, this is not so soon that you’ll be rushed into making a purchase in a hurry, but it’s close enough that you’ll be ready to buy the right home when it comes along.
Consider ordering a free copy of my guide for first time home buyers. This is also a good time to make an initial contact with a Realtor. Discuss your needs and get your questions answered about the best way to proceed from here.
Q&A : How can I avoid paying too much for my home?
Q: How can I avoid paying too much for my home?
A: This is a great question and I wouldn’t recommend you enter into any Real Estate transaction unless you’re satisfied that you’re paying fair market value for the property. The answer to how you can avoid paying too much comes down to ensuring you have professional representation as a home buyer.
Buying Real Estate is a learning process, whether it’s your first home or not. One of the services I provide my clients is ensuring they are up to speed on the current market conditions and trends. My philosophy is that if I have any information or knowledge that will be important to you in a transaction I make sure this information is available for you to benefit from.
One specific way in which you can ensure you don’t over-pay for a property is to ask your agent to complete a comparative market analysis of the home you’re considering making an offer on - this is a service I provide to all of my buyer clients. This should include records of recent sales of similar homes (in the same neighborhood with similar features and characteristics). By analyzing what other buyer’s were willing to pay and other seller’s were willing to accept you can be confident that you’re paying a fair price for your home. Sellers control the prices in the marketplace but the market value of a home is not established until a seller agrees to accept a price and a buyer agrees to pay it.
Remember, you’ll be spending hundreds of thousands of dollars - usually involving some borrowed money. Having accurate market knowledge and information is crucial under any market conditions, and another important reason to ensure that you are represented by an agent who is working for you as a home buyer. Under Alberta Real Estate law, you have the right to be informed about who an agent is representing in a transaction. Make sure you understand, and are comfortable with the level of representation you have.
Q&A: Why do I have condo fees and where do they go?
Q: Why do I have condo fees and where do they go?
A: This is a very common question from anyone considering purchasing a condominium unit. Some general background on condominium ownership is helpful in answering this one.
When you purchase condominium property you’re buying two things
- The physical condo unit
- Shares in the condominium corporation
These shares are called ‘Unit Factor’ and every condo in Alberta has a total unit factor of 10,000. For example if your unit has a ‘Unit Factor’ of 2,500 then you own 25% of the shares of the condominium corporation.
Condo fees are paid to this corporation, or commonly to a management company hired by the condominium board to oversee the maintenance and repair of the buildings, ground and facilities. This money is paid to the corporation that is owned by the condominium unit owners for the benefit of the owners. The funds go towards a variety of utility, maintenance, insurance and management items that vary from one condominium to another. Some common items include:
- insurance on common property
- exterior maintenance and repair
- landscaping and snow removal services
- reserve fund contributions
- maintenance and repair of amenities associated with the condominium (exercise facilities, swimming pools etc.)
Many condominium corporations are setup to pay many of the utilities servicing the units from the corporation. This is especially common in apartment style condos where the fees often cover:
- heat
- water/sewer
- electricity
Remember, the condominium fees (or contributions) are paid to a corporation owned by the unit owners and they go towards services that benefit the owners. Every condominium is different, has different fee amounts and covers different items. The setup and financial condition of the condominium corpopration is very important so be sure to investigate these areas on any condo you consider purchasing.
Have a question of your own? Ask it here!
New Feature: Questions & Answers
I’m working on developing the Q&A channel of this site. I will be regularly sharing the answers to questions received from clients and readers of the site and hope this will develop into a useful, searchable resource for anyone to access.
Have a question? Please email me or use the ‘ask a quesiton‘ page to submit it.
I'm committed to helping my clients buy, sell and enjoy their homes and I strive to provide an added level of value and service at every stage of the Real Estate transaction. 