When you purchase a condominium, it is important to review condominium documents including the corporation’s bylaws, the reserve fund study and plan, the rules & regulations, and the budget, at a minimum. A condominium is a multi-unit property that is divided into individual units; ownership in a condominium includes partial ownership in shared common property. In other words, a condominium owner has joint ownership of the corporation’s assets. The shared common property may include the lobby, corridors, the mechanicals and elevators. Condominiums come in many different configurations including townhouses, apartments and homes within a larger development or neighborhood setting.
The key condominium documents include:
Bylaws - Condominium bylaws govern how the condominium corporation is run and outline the rules and covenants of the Board of Directors and owners and residents. They address matters such as the collection of contributions, special assessments, rental units, any restrictions such as pets to name a few. Before purchasing a condominium, you should review the bylaws to ensure they suit your needs. The condominium corporation has the authority to impose sanctions to owners who breach the bylaws.
Budget – The operating budget outlines where the condominium will get revenue and the estimated expenses to maintain and operate the corporation. The budget is prepared annually.
Reserve Fund Study & Plan – This study outlines the state of the common property of the corporation to be used to plan future capital expenses. The study involves a physical inspection of the condominium’s depreciating property and must be completed every five years. The plan addresses how the Board will address the revenue and expenses to meet the long-term capital requirements. The plan may involve special levies and/or increased condominium contributions.
Knowing the financial health of the corporation is important for any condominium owner. As an owner you may wish to get involved as a board member to provide your input in how the corporation is run and to be part of the decision-making process. Board members are typically elected each year for unit owners and the bylaws will outline specific rules related to your condominium. Note that some boards will establish committees to get things done. Working on a committee is also a good way for unit owners to be involved.