By Mark Demas
People who want to become homeowners in Alberta must decide if they want a condominium or a freehold unit. There are key differences between them, in terms of the units themselves and the legal process of acquiring each one.
According to the latest figures from Statistics Canada, there were 1,633,220 residential units in Alberta in 2021. Of those, 294,875 were condominium units and 1,338,345 were classified as non-condominiums.
What is a condo?
As the Canadian Mortgage and Housing Corporation notes, “condominium” or “condo” refers to a form of legal ownership, as opposed to a style of construction. Although many people think of condos as units in high-rise residential buildings, they can also include low-rise residential buildings, townhouse complexes, stacked townhouses, duplexes, triplexes, single-detached houses or vacant land upon which owners may build.
Detached and semi-detached homes, duplexes and townhouses are usually owned freehold.
What makes land or a development a condo development is that it is registered with Alberta Land Titles as a condominium corporation. That is usually done by the developer during the building, renovation, or development of the property.
There are several differences between owning a condominium from owning a traditional single-family home. For example:
- Along with owning their private unit, condominium owners also own a portion of all shared common elements, such as lobbies, hallways, elevators, recreational facilities, walkways, gardens, structural elements, and mechanical and electrical systems.
- With a freehold home, you own the home outright after the mortgage is paid off. With a condo, residents must pay a monthly fee to cover the upkeep and replacement of the common elements, and that fee can be raised at the discretion of the condo board.
- Freehold ownership means that you own the land and house outright, with no space co-owned or co-managed with owners of adjacent homes. You are also solely responsible for the maintenance and upkeep of your property.
- With a condo, any improvements or work to be done in common areas has to be approved by the condo board.
Condo owners are responsible for the maintenance, repair and remodelling of their units unless the bylaws of the corporation say otherwise. However, an owner may need the board’s permission to remodel their unit if the changes affect the common property or the publicly exposed space of your unit.
Condominium plans are important
The exact boundaries of a condominium unit are identified in the condominium plan. Developers must provide buyers with a copy of the condominium plan when a unit is purchased.
It also includes the common space and facilities outside the unit, such as hallways, elevators, heating and electrical systems, laundry rooms, recreation rooms and landscaped areas.
Powers of a condo board
A condominium corporation is a legal entity that represents the individual condo owners. It owns and operates the common property on behalf of the owners collectively. Created under the Condominium Property Act, it can enforce its bylaws and rules, buy goods or services, hire contractors, and sue or be sued.
Condominium bylaws vary greatly, reflecting the needs of the corporation. For example, some may establish minimum age requirements such as requiring that residents must be 55 years of age, or older. In the past, condo bylaws could exclude children from living there, but that changed in 2018.
According to the Alberta Real Estate Association, if a condominium corporation wishes to restrict ownership in the complex by age, its only choice is to use an age restriction that is 55 or higher. Additionally, if the older (over 55) occupant dies, and a younger spouse or co-habitant is left residing in the unit; this younger individual can stay.
Other bylaws may exclude pets from the complex, set out restrictions on noise, the storing of hazardous or flammable materials, or interfering with others’ use and enjoyment of the common property.
Everyone occupying a condominium is bound by the bylaws of the corporation. If there is a conflict between the bylaws and the Condominium Property Act or regulations, the Act or the regulations apply.
Purchase agreements
The final step when purchasing either a condominium or a traditional house is to sign a purchase agreement. These are complex legal documents so buyers should always consult with a lawyer prior to agreeing to the terms and conditions it sets out.
Under the Condominium Property Act, purchase agreements must include:
- How to cancel the purchase agreement (in the prescribed form).
- A description or drawing if the condominium unit or the common property are not substantially complete.
- The interior and exterior finishing of the building.
- Recreational facilities, equipment and other amenities.
- Maintenance equipment for the common property, managed property and the corporation’s property (real and personal)
- The location of roadways, walkways, fences, parking areas and recreational facilities and any significant utility installations, major easement areas and retaining walls
- The estimated amount of monthly condo fees (determined by the unit factor, which is usually proportional to the size of the unit).
Home inspections are always a good idea
Whether you’re buying a condo or a house, make it a condition of your offer to purchase that the property has to pass a home inspection. Many condo buyers think that is unnecessary since many technical features (electrical, plumbing, roofing, etc.) are common elements, meaning they are jointly owned with the other unit owners and are the responsibility of the condo board.
However, it is still a good idea to bring in a home inspector before buying a condo. Problem areas they should be able to uncover include:
- Issues with floors and ceilings can indicate much deeper structural issues. Mould, cracked ceilings and warped wooden floorboards are red flags buys may not notice.
- Ensuring that windows and doors function properly and lock. Drafts from ill-fitting windows and doors will result in higher heating bills.
- In the bathroom, an inspector can check for gaps in the caulking in the shower and test the water pressure strength. Mildew and strange smells can also be detected in an inspection.
- Similar water issues may arise in the kitchen. Inspectors can also check built-in appliances and extractor fans to ensure they are correctly installed and grounded.
- Inspectors will also check ventilation ducts for blockages, as this could present a problem with energy efficiency and reduce the indoor air quality.
- If the unit has an outdoor balcony inspectors will look for cracks in the concrete or walls that may indicate underlying damage.
Deciding between a condo or freehold home
Generally speaking, you should buy a freehold home if:
- You want the freedom to make improvement, decorating and style decisions, without the approval of a board.
- You want a more private living space (though semi-detached and rowhouses still have neighbours on the other side of the wall) and a yard you can use freely.
- You can do most of the maintenance or repairs the home needs, or you have the money to hire someone.
A condo may be right for you if:
- You want someone else to look after the regular maintenance of a house, including lawn mowing and snow removal.
- You want the convenience of having major repairs (a new roof, plumbing issues) handled by someone else;
- You want access to amenities (indoor parking, a concierge, a gym, a pool) that many freehold homes do not have.
Contact us for assistance
When deciding between owning a condo or a house, it is essential to weigh the pros and cons of each. The team at Demas Schaefer can assist you with all legal issues that come with home ownership, including if a purchase agreement is fair and enforceable. Making a freehold or condo purchase without legal counsel is a foolish move in almost all cases since it may be your largest investment. Anyone in northern Alberta can contact us for a free consultation.