Condominium Ownership

As of January 1, 2010 the Condominium Property Act will be changing. For a preview of the new Act (reference number C-16.05) please refer to the NB Acts and Regulations webpage.

The current version of the Act is still in effect until December 31, 2009 and can also be found on the same webpage (reference number C-16).

Please check back for more information about the new Condominium Property Regulation which will be available this fall.

Developing or Purchasing a condominium is not at all similar to other types of Real Property.   Condominiums, defined and regulated by the Condominium Property Act, must be treated with care when being dealt with.   Informed developers, buyers and sellers can minimize the number of issues arising from the uniqueness of properties falling under the Condominium Act.

The following information is designed to assist all interested parties in better understanding issues that may arise.

What is a condominium?
What do I own when I buy a condominium?
What are the advantages of Condominium ownership?
What are the disadvantages of Condominium ownership?
What should I know before I buy?
What rules should I be familiar with?
Who takes care of the Building and Grounds?
What Insurance do I need?
How is a condominium created?
What is the Condominium Corporation?
What is the Condominium Board?
What should I know about Land Titles?
Condominium Property Act
Regulation 84-149 under the Condominium Property Act

What is a condominium?

The term "condominium" describes a type of legal property ownership and how it relates to a physical structure or style of building. Residential condominiums can be high-rise or low-rise apartments, townhouses, detached houses, stacked townhouses - any type of housing you can imagine. What makes them "condominiums" is not their physical structure, but the way owners have agreed to share ownership and maintenance of common property (common elements), while keeping individual ownership of their own units. Condominium ownership is not limited to residential property.

In effect, there are two components in condominium ownership, namely individual ownership of the ‘unit’, and shared ownership among unit owners of the ‘common area’.

Within the individual unit, the condominium owner normally owns the property between the finished walls of the unit, in much the same position as anyone who owns a single-family dwelling but does not own the common walls, load bearing walls, exterior walls and fixtures. An owner has full use of the unit property and must pay all costs associated with its operation and maintenance, including insurance for the unit. The owner is also responsible for a portion of the costs of maintenance of all the common elements in the corporation and may also become part of the “Board” which manages the common areas.   The owner is also restricted as to what he or she can do outside of the unit.

What do I own when I buy a condominium?

You own your “Unit” as well as an undivided interest or percentage of the common property elements.   These are defined in the Condominium declaration described in the next section.   Typically, your unit consists of space within the finished walls of your living space. Common elements are those which you have rights to access / use such as halls, pools, septic systems, land, exterior walls, general structure, etc.   In addition to ownership you also have a responsibility to share in the cost of maintenance of these areas. The division of ownership is set out in the condominium corporation's declaration and/or by-laws and subject to the Condominium Property Act, Ch. C-16. The proportions of the common interests are expressed in the Declaration.

What are the advantages of Condominium ownership?

  • It makes private ownership possible in areas where land values would ordinarily make this prohibitive, such as close to downtown.
  • An individual unit owner is not generally responsible for day to day maintenance often associated with home ownership, since exterior maintenance of the units, painting, snow removal, and landscaping are the responsibility of the corporation and are paid for through the “common expenses” fees paid to the corporation by the owners of each unit. Maintenance is usually carried out by a manager or under the direction of the Board.
  • Owners can vacation and travel knowing that the exterior of their property will be maintained while they are away.
  • It enables the owner to participate in decision making which affects the property.

What are the disadvantages of Condominium ownership?

  • Individual decision making gives way to decision making by the group of owners. You may not always agree with every decision.
  • Independence and privacy. Community living can have its ups and downs, and your enjoyment of your property can be affected by your neighbors, the amount of noise or smells coming from their homes, their backyard activities, and even parking can become the source of disagreement.
  • The rights of entry. The Corporation and its agent may have the rights of entry anytime in cases of emergencies and at any other time upon giving reasonable notice to the owner.
  • Unit occupancy. Is the building mainly owner occupied or dominated by rental occupancies? Absentee owners may not have the same maintenance and repair priorities as owners who occupy their units.
  • If the development was done as a phase development, then one single corporation might be responsible for multiple buildings, so your maintenance fee could be applied to a different building than the one your unit is located in.

What should I know before I buy?

Before you buy a condominium unit, perform your own research about the building and the Corporation, which should include some of the points below. In the cases of existing Condominiums you should be able to obtain copies of the declaration, bylaws, common element rules and an audited financial statement from the existing Corporation   for your review. In the case of new condominium constructions, many times these documents are not readily available so you should seek legal counsel in order to add critical clauses to your offer of purchase and sale so that you can decide to withdraw if the conditions are not acceptable. Besides the questions common to the purchase of any property, you should know the answers to the following:

  • Does the declaration prohibit any particular occupation or use of the units? Common examples are the prohibition of pets and of conducting a business from the unit, air conditioning units, satellite dish to name a few.
  • Is the project registered as a Condominium Corporation? If not, when is registration anticipated?
  • How many of the units are sold; are they owner occupied or rented?
  • If the unit is presently occupied by a tenant, how much notice to quit is required by the Residential Tenancies Act?
  • What is the reserve fund balance (This is the fund set aside for major repairs or renovations)?
  • Are any major renovations or repairs anticipated in a short term?
  • How much are the common element fees? What expenses do they cover?
  • Is the corporation self-managed or managed by a professional management company?
  • Canadian Mortgage and Housing Corporation (CMHC) has a “Condominium Buyers’ Guide” which includes a well detailed checklist that could be very useful.

What rules should I be familiar with?

Every condominium is governed by its own unique rules, regulations and by-laws. These are necessary to ensure that condominiums are properly operated and maintained, and to define the rights and obligations of the individual owners.

With respect to rules regarding the individual owners, condominiums may have restrictions regarding the number of occupants per unit, the age of occupants, pets, noise, and parking and when certain amenities may be used. Many condominiums have strict rules concerning the alteration of the unit space or its appearance. Additionally, you may have to get the permission from the condominium’s Board of Directors before you do the following: change exterior fixtures, install a satellite dish, setup a clothesline in the backyard or on your deck, add a new gazebo;   install air conditioning units in windows, and   in particular make changes that may affect the condominium’s structure or safety.

Individual condominium owners may be obliged to attend condominium meetings or serve on condominium boards and committees. All condominiums have requirements for the payment of monthly condominium fees. There will also be mandatory charges for a reserve fund in addition to the maintenance fee for unforeseen major repairs to the condominium common elements.

Ensure you carefully review and consider all rules and obligations when considering the purchase of a condominium. They should be available from the unit’s vendor (the declarant), or from the condominium Corporation. The rules of the condominium will be clearly outlined in the condominium governing documents, and you should become familiar with them prior to purchasing a particular condominium unit.

Who takes care of the Building and Grounds?

Day to day operations for maintenance and repair for the common areas (i.e. lands, hallways, roof, exterior walls, decks, patios, and doors) are managed by the Board on behalf of the Condominium Corporation. Some Corporations choose to have a permanent manager to do these chores.   Each owner shares, in the cost of these items through collection of monthly fees prescribed by the board, also generally known as condominium fees.   (These are called “common expenses” in declarations and by-laws.)

Each owner is responsible for any and all repairs within his or her respective unit.

What Insurance do I need?

The New Brunswick Condominium Property Act states “A corporation shall insure its liability to repair the property after damage resulting from fire, tempest or other casualty to the extent required by the declaration or the by-laws.”   Your portion of the cost of the insurance purchased by the condominium corporation is usually included in your monthly condominium fees.

That being said, it does not cover your unit and your possessions or your liability if there is an accident inside your unit. Most declarations have a section defining the need for insurance maintained by unit owners.

How is a condominium created?

To create a condominium, a "declarant", usually a developer and the initial vendor of the units, submits a number of documents, including a declaration,   by-laws and a Plan of Survey showing the extent of the property and individual unit boundaries for approval by the Director of Surveys. Once the Director completes his inspection, he will give his approval via his signature on the Plan of Survey. These three documents in addition to the structural plan are then presented to the appropriate Land Titles office and these four documents will become the “description” of the condominium property. The Condominium Property Act and Regulation 84-149 sets out in more detail how this should be done. When these documents are registered, a legal entity is formed, that is, the next Condominium Corporation for the county is formed and will be named accordingly by the Registrar of Land Titles. (For example, Kent County Condominium Corporation No. 5.)

What is the Condominium Corporation?

The primary purpose of the Condominium Corporation is to manage the condominium’s property and business affairs. The members of the corporation are the owners of the units.   As soon as the Condominium Corporation is formed by the Registrar, the declarant ceases to be the developer and becomes a full owner in the Corporation, (for example, in a six unit condominium he has all six votes). Upon the sale of the last unit,   the declarant is totally out of the project and has nothing to do with the Corporation, the buildings or the land   except to support any warranty issued for the construction of the building. The Corporation becomes the only owner and has full responsibility of the condominium common element property.

Some of the corporation's duties include:

  • setting up a Board of Directors
  • managing and maintaining the common elements;
  • establishing a fund for the payment of common expenses;
  • ensuring that a reserve fund is set up and that the appropriate fees are contributed to the established reserve fund to replace major capital items, such as the roof or unexpected maintenance items;
  • preparing the annual budget and assessing and collecting owners' contributions to these funds;
  • paying common expenses;
  • adequately insuring its liability;
  • holding meetings of owners;
  • ensuring that the owners comply with the Condominium Act, the declaration, and the by-laws;

What is the Condominium Board?

Membership on the Board is defined in the declaration or bylaws and governed by the Condominium Property Act. Membership consists of at least three “Owners” elected by members of the Corporation who are all of the other owners of the condominium units.     The board of directors is responsible for ensuring that the requirements of the declaration and bylaws are satisfied and will oversee the management of the corporation.

What should I know about Land Titles?

Since the implementation of the Land Titles Act in New Brunswick, all new condominium properties have to be registered under Land Titles before any approval process can start.

 
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