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Common expenses fees

A common expenses fee is the fee unit owners pay to maintain the condominium’s common elements.

Common elements are everything in a condominium that isn’t a unit. Examples include a parking garage, hallway, lobby, recreation centre and elevator.

Common expenses fees

Condominium ownership expenses can be broken as:

  • paying the full cost for the upkeep of a unit
  • maintaining common elements

The board calculates an annual budget every year and splits it into monthly fees billed to each owner.

How are common expenses fees calculated?

A common expenses fee consist of several components:

  • an amount for the operation of the condominium
  • an amount for a reserve fund (see below), and
  • an amount to pay for a portion of facilities shared with other condo corporations (like a parking garage or recreation centre), if applicable.

The corporation’s declaration states the portion each owner must contribute to the budget. This portion is expressed as a percentage and may vary often by the size of the units.

What is a reserve fund?

A condominium corporation saves money in a reserve fund so it can manage the financial burdens of major repair or replacement of common elements as needed.

All owners in a condominium – past, present, and future – must share the cost of major work. The reserve fund balances the rights of ownership with the need for stewardship of the condominium.

Without a reserve fund in place, the financial burden falls only on owners who own units at the time the work is undertaken. It is not borne by people who enjoyed the common elements during their time as owners but who have since sold their units.

What is a special assessment?

A condominium corporation creates a budget for every fiscal year. Should a budget shortfall occur, the corporation must find a way to cover its expenses. Large shortfalls can force the corporation to assess an extra one-time charge, known as a special assessment, for each unit.

Special assessments can occur for reasons like:

  • Unforeseen urgent repairs.
  • Changes in government regulations that require equipment to be updated sooner than predicted.
  • Budgeting tactics that keep common expenses fee artificially low while not effectively covering anticipated expenses.

What Are Chargebacks?

A chargeback is an addition to a unit owner’s common expenses fees to reimburse the condo corporation for a cost it incurred resulting from an act or omission on the part of an owner. It is important to remember that chargebacks must consist of a cost that the condo corporation incurred as allowed under specified provisions in the Condominium Act, 1998 (the “Condo Act”) or in relation to an indemnification clause within the condo corporation’s declaration. Not paying a chargeback as provided under provisions of the Condo Act or the condo corporation’s indemnification clause constitutes a default under section 85 (1) of the Condo Act and can be recovered through the lien process.