Creation of Condominium
Condominiums in Ontario are created by the registration of a condominium declaration and description under Condominium Act which regulates the development, registration and running of condominium corporations within the province. According to the Condominium Act, the declaration itself together with the by-laws and rules of the condominium are intended to govern most if not all aspects of the condominium including the condominium's management and operation.
The declaration and its schedules will specifically set out the boundaries of the condominium units and common elements, the common expenses of the condominium, the owners' percentage interests in the common elements and percentage contribution towards common expenses and exclusive use areas of the common elements. The "condominium description" is itself a plan of survey of the lands, buildings and structures included within the condominium.
The condominium by-laws govern the condominium corporation’s internal operation. By-Laws, amongst other things, outline the organization of the condominium and set out procedures and protocols for the management and operation of same. In addition the by-laws may authorize the condominium to carry out certain acts and enter into various agreements. A unit owner shall should be familiar with the condominium's by-laws as it will contain information about any restrictions - for example pets, renting, allowed number of occupants within a unit, making renovations, etc.
The condominium rules will typically govern the day-to-day use of the common elements and units by owners.
It is important that you review these documents to become familiar with their contents and understand the rights and obligations associated with your ownership of the condominium unit. In addition to the matters outlined above, this documentation will contain provision relating to maintenance and repair obligations with respect to units and common elements, insurance obligations, rights of entry, etc. and may as well limit your use of the property and impose financial obligations on you.
Reserve Fund Study
Reserve Fund is a fund required to be set aside by the Condominium Corporation to cover the major repair and replacement of the common elements and assets of the condominium. Under the new Condominium Act, condo corporations must have a reserve fund study done within three years from last reserve fund study. The study evaluates the remaining life expectancy of each building component over a projected 30 year period, considers the projected replacement cost of each building component and a financial plan to fund such replacement through the projected reserve fund with recommendations for what amount the monthly deposit should be into reserve from monthly common expenses paid (the deposit amount is decided based on the current balance in the reserve fund, the existing state of repair of the project, etc.).
The board of directors for condo must propose a plan for funding the reserve fund and send notice of funding plan to unit owner begin its implementation, according to the result of reserve fund study.
When expenses for projects or repairs are incurred and the condominium corporation does have enough reserve fund to cover, individual unit owners are required to make payment (the “special assessment”) in addition to their monthly condo fee. A well run and maintained condominium rarely has the need for special assessments. A prospective buyer would be wise to learn if the condominium has had a history of special assessments.
Creation of Condominium