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Condo Fee Calculation
We have 3 buildings within the complex and condo fees are calculated using unit factors. Due to a change in the original building design, the 3rd phase (building) had additional units added which resulted in lower condo fees for that building. The other buildings are saying that this inequity in fees needs to be addressed but there is not a clear cut answer. The condo fee calculation is in our bylaws so we need to change the bylaws to get a change in how condo fees are calculated. One way that a lawyer suggested was basing this on square footage which will have an initial increase of fees for Building 3 and a decrease for the other two before balancing out. This of course is causing hard feelings. Another proposed method was to base fees on the operating budget divided by the total number of units so each unit pays the same. The issue is that someone with a 500 square foot unit pays the same as someone with a 1000 square foot unit.
Has there been other way of calculating fees that could be equitable between 3 buildings without furthering a rift already in place.
Thanks
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4 Replies
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Have you considered modifying the condominium plan as registered in the Land Titles Office? since every condominium consists of 10,000 unit factors, it seems the fairest solution would be to recalculate all the units to reflect the additional number of units in the third building. This will involve a knowledgeable condominium lawyer, a surveyor (perhaps the original surveyor who assigned the original unit factors) and probably a court. It would be expensive but should produce an equitable long-term solution.
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Most people feel sqft is the best way to determine unit factors. However, the unit factors are typically registered when the condominium plan is filed by the developer. Developers typically use sqft but can use anything that makes sense to them to determine what they should be, they are not limited to sqft. Some use views or higher floors to give larger unit factors, some use the price they are selling a unit at as justification (in their minds) because it would help them sell the unit faster).
In my experience, I’ve seen some bylaws/calculations reflect hybrid unit factor calculations with some items shown as calculated on sqft (such as utility bills, insurance, contribution to the reserve fund, most operations type costs) and some calculated on equalized fees as directed by the Board. These would typically be items that would be considered an equal shared cost because the cost isn’t directly related to any individual unit size and is shared equally by all the unit owners.
Examples might include the most common area repair and maintenance, and reserve fund expense. Ask yourself does the fact that you are painting the common area hallways mean that unit ‘x’ should pay more because they are a bigger unit? However, a window replacement might make more sense by a unit factor calculation if units have different numbers or sizes of windows based on their size and unit type. A hard sell for units currently with lower unit factors to agree to as you will be asking the to pay more in condo fees. What about a commercial unit that doesn’t have any windows being replaced, should they pay a share of all the residential unit window replacements? This all gets very tricky in the budget calculations as you have to determine what expenses should be budgeted as equal contributions and the majority of expenses that should be calculated by unit factors.
Regardless of what you do as far as changing unit factors, you need to pass the bylaw changes and a new chart of units factors as calculated with the changed calculation definition, as a special resolution at an AGM or Special Meeting, with 75% of the unit factors and 75% of the persons entitled to vote to approve the Special Resolution. To do that you should plan a special information meeting to explain why you feel this is important and why everyone needs to get on board. It is not easy to have a special resolution passed and it takes work.
If you can achieve the vote requirements you can then go to Land Titles and request the change not only the registered bylaws and but also the unit factors in the Condominium Plan. The changes are not n effect until they are registered.
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