Having become a popular phenomenon over the past decade, living in a condominium is an attractive option for buyers who are looking for affordable homes with great amenities and located in prime locations. For young urban professionals, it is the closest they can get to enjoy a live-work-play lifestyle that requires the least maintenance.
Recently, though, not only young adults but also families with young children are moving into condos. Over the GTA and nearby cities, condominium developments continue to spring up as the demand for reasonable dwellings grows. Condos still command Canada’s new-home construction while also playing a significant role in the rental market.
Types of Condominium
Condominiums are classified into two major categories – freehold and leasehold. With freehold, the tenant owns the unit outright or has taken a mortgage to secure it. Freehold condos are further classified into three – standard, vacant land, and common elements. Meanwhile, with leasehold condominiums, tenants do sign a contract with their landlords but do not own their units.
The different types of condos have their own share of advantages and disadvantages. It is important for buyers to do their research and determine the condominium type they are purchasing to better understand their rights and obligations as unit owners. Check out the top new home builder in Ottawa, eQ Homes, if you are looking for your dream condo in the best neighborhood.
Freehold Condos
The term freehold indicates that the condominium developer owns the land where the units are being built, thus ownership is transferable to potential buyers. With a freehold condo, the unit buyers will not only own the unit they purchased, but also the land on which the building stands. For this reason, a freehold condo is considered a more valuable investment than a regular townhouse or house condo.
Owners of this condominium type are responsible for the upkeep of their unit, including the exterior walls and roof, as well as the garage, garden, and driveway. Common property elements like visitor parking areas, recreational facilities, and access roads are the responsibility of the condo corporation. If you are looking for types of condos that give you more freedom to make improvements, freehold condominiums maybe your best option. For a comprehensive guide and listings, check out SG.PropertyPursuit.co, which offers detailed insights and options for finding the perfect condo to suit your needs.
Standard Condos
The most common condo type, standard condominiums are buildings that are divided into separate units. You own the unit’s walls, ceiling and floor, as well as the plumbing and the electrical wiring within your premises. In some cases, your purchase comes with a parking spot. Everything else outside your door is considered a common element.
Common spaces like hallways and driveways are jointly owned by you and your neighbors. If your condo building has amenities like a gym or swimming pool, you have access to those as well, but you do not own them. For maintenance of these spaces, you will have to collectively pay a monthly fee to the owners association.
Vacant Land Condos
These types of condos consist of only bare land that will be sold as units. Corporations register and sell their lands as condominiums before any construction begins. With vacant land condos, you own not only your house but also the land that it sits on. Maintenance fees for this condominium type are usually less because of this.
Common Elements Condos
This is a unique type among all the condos on the list. When you buy a common element condo, there are no units involved, only shared spaces or amenities. Interest is attached to the land parcels, collectively referred to as PTOLs. Owners of these land parcels are responsible for maintaining the common elements via cost-sharing.
Leasehold Condos
With this second major type of condo, the land is not owned by the condominium corporation. The landowner leases out the property to the developer, with a tenancy period of 40 years or longer. Condo buyers do not own the units. They only have leasehold interests. Land cost is not included in the fees for common expenses, but a portion of your rent payable to the landowner is incorporated in the common expenses fees.
If you own these types of condominiums, you can take action with your unit without the need to ask for permission from the landowner, including selling it or using it as a mortgage. Keep in mind that in the event that you do sell it, the unit price may be affected by the time remaining on the land lease. Once the ground lease expires, the unit owner’s right to occupy the condo is automatically terminated.
Checklist for First-time Condo Buyers
If it is your first time to buy a condo, it is not enough that you only know about the types of condo available in the market. You must also consider other aspects, including the property location, association dues, and other fees, as well as the condo’s amenities. For instance, in choosing the best location of the condo, you have to keep in mind the security of the neighborhood, area traffic, and the property’s proximity to your workplace. A prime location is not always ideal.
You must also inquire about monthly fees paid by the residents to the homeowners’ association, where they go, and whether they are likely to increase in the future. Amenities are perks that unit owners can freely enjoy, but you have to consider their availability or if there are restrictions for use. Remember that common properties can be enjoyed by all the residents, not only you. Open houses or unit viewing are great opportunities to explore your options.
When you scout for a condo, having a reliable agent will help in navigating the process. They can also help you make sure that your property developer has a good reputation and portfolio. Above all these tips, first-time buyers must not forget to assess their financial capacity before even considering buying a property. Make sure that you are financially ready to handle any future expenses and fees that come with owning one.
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