How Condo Fees Are Calculated in Ontario: A Complete Guide for Board Members
Practical Guidance for Smarter Condominium Governance in the Sarnia and London Areas
At Sapphire Condominium Management, we help condo boards across the Sarnia and London areas make sense of their finances, from day-to-day spending to long-term reserve planning. Currently, we support board members in the Sarnia and London areas in making operating decisions that impact over $10 million of budget.
One of the most common questions owners and new board members ask is: What exactly are condo fees paying for, and how are they calculated? Let’s break it down.
What Are Condo Fees? A Practical Guide for Ontario Condo Owners and Board Members
Condo fees. Two words that generate more confusion, frustration, and heated AGM moments than almost anything else in condominium living. Yet for all the debate they spark, most people — including many board members — can't fully explain what they actually cover, why they're structured the way they are, or why they keep going up.
This guide answers all of that. We'll walk through what condo fees are, what they pay for, who sets them, and why they're not just "extra costs on top of your mortgage." By the end, you'll be able to explain condo fees clearly to any owner — and defend your board's budget decisions with confidence.
The Basic Definition: What Condo Fees Actually Are
Condo fees (also called common expense fees or maintenance fees) are mandatory monthly payments made by unit owners to the condominium corporation. Unlike rent, condo fees don't go to a landlord. They go into a shared pool that the corporation uses to maintain and operate the building and property on behalf of all owners collectively.
In Ontario, the legal framework for condo fees is established by the Condominium Act, 1998. The Act defines how fees must be calculated, what they must cover, and what financial obligations condominium corporations have. It's not optional — every registered condominium corporation in Ontario must collect fees sufficient to fund its approved budget and required reserve fund contributions.
Think of condo fees as your proportional share of the cost of running a building that you co-own. You own your unit outright, but the hallways, roof, elevators, parking structure, landscaping, mechanical rooms, and common areas — those belong to the corporation, which belongs to all owners collectively. Condo fees are what makes maintaining all of that possible.
What Do Condo Fees Cover?
The specific expenses covered by condo fees vary by property, but generally fall into two categories: operating expenses and reserve fund contributions.
Operating Expenses
These are the day-to-day costs of keeping the building running safely and well. Common operating expenses include:
• Property management fees — the professional management company that handles day-to-day administration, contractor coordination, financial reporting, and owner communications
• Building insurance — commercial insurance that covers common elements and the building envelope (note: this doesn't cover contents inside individual units)
• Utilities — hydro, natural gas, and water for common areas, elevators, heating systems, and shared amenities
• Grounds maintenance — lawn care, seasonal plantings, tree maintenance, and general upkeep of exterior spaces
• Snow removal and winter maintenance — salting, plowing, and walkway clearing
• Cleaning services — common area cleaning, lobby maintenance, garbage room upkeep
• Elevator maintenance and inspection contracts
• Security systems — cameras, access control, intercom systems
• Waste management and recycling programs
• Administrative costs — audits, legal fees, AGM expenses, postage, banking
Reserve Fund Contributions
The reserve fund portion of condo fees is money set aside for future major repairs and replacements. This isn't operating money — you won't spend it this year. It's the building's long-term savings account, and the Ontario Condominium Act requires every corporation to fund it.
What gets paid for from the reserve fund? Things like:
• Roof replacement or major repairs
• Elevator modernization or replacement
• Parking structure waterproofing and resurfacing
• Window and balcony door replacements
• Boiler and HVAC system replacements
• Exterior cladding and envelope repairs
• Underground garage membrane replacement
These projects cost tens or hundreds of thousands of dollars. Without a reserve fund, any one of them could require a devastating special assessment on top of regular fees.
What Condo Fees Do NOT Cover
Just as important as knowing what condo fees cover is knowing what they don't cover — because misunderstanding this is a major source of owner frustration.
In almost all cases, condo fees do not cover:
• Repairs or maintenance inside individual units — plumbing within your walls that serves only your unit, for example
• Contents insurance — you need your own HO-6 or equivalent condo owner policy
• Parking and locker costs — in many buildings these are separate or listed separately in the status certificate
• Special assessments — these are separate charges levied for unanticipated expenses or reserve shortfalls
• Unit modifications or renovations
The exact boundary between what the corporation maintains and what the owner maintains is defined in the condominium's declaration and bylaws. Board members should be very familiar with this boundary — it's the source of more maintenance disputes than almost anything else.
Who Sets Condo Fees?
The board of directors sets condo fees by approving the annual operating budget and accepting the reserve fund study recommendations. Unit owners do not vote on the budget, though they have the right to receive it and review it. This is an important distinction that many owners don't understand.
This is also why communication matters so much. If owners don't understand why fees are going up — or what they're paying for — they assume incompetence or mismanagement. A board that proactively explains its budget decisions in plain language builds trust. A board that simply sends a new fee amount builds resentment.
At Sapphire Condominium Management, we help boards produce owner-facing budget summaries that explain fee changes in plain, non-technical language. It takes effort upfront, but it dramatically reduces complaint volume and builds a more functional ownership community.
How Condo Fees Are Apportioned Among Owners
Not all unit owners pay the same fee. Each unit is assigned a unit factor (sometimes called a proportionate share), which is a percentage set out in the condominium's declaration. These percentages reflect each unit's relative size and value within the corporation.
The total budget is divided among all units according to their unit factors. So if your unit has a unit factor of 0.70% and total monthly expenses for the building are $60,000, your monthly fee would be approximately $420.
Unit factors are fixed in the declaration and cannot be changed without the consent of a supermajority of owners — so they're stable over time, even as total fees change.
Are Condo Fees Worth It?
This is the question owners actually want answered. The honest answer: yes, when the building is well-managed and the board is making sound financial decisions.
Consider what condo fees replace. As a homeowner, you would be personally responsible for:
• Your own full insurance coverage
• All exterior maintenance (roof, windows, driveway, foundation)
• All landscaping and snow removal
• Major system repairs (furnace, AC, water heater)
• No shared reserve savings — every big cost hits your wallet at once
Condo fees convert these unpredictable, lumpy costs into a predictable monthly expense. When a condo corporation is well-run, that predictability is extremely valuable.
The flip side is also true: a poorly managed corporation with underfunded reserves and reactive maintenance will cost owners far more in the long run through special assessments and deferred value loss. Board quality matters enormously.
Frequently Asked Questions
Do condo fees include property taxes?
No. Property taxes on individual units in a condominium are paid directly by each unit owner to the municipality, just like any other property owner. The corporation does pay property taxes on common elements, but this is a small component of the overall operating budget.
Can condo fees be tax-deductible in Canada?
Generally, no — not for owner-occupied units. If a unit is used as a rental property, a portion of condo fees may be deductible as a rental expense. Consult your accountant for advice specific to your situation.
What happens if I don't pay my condo fees?
Under the Ontario Condominium Act, unpaid condo fees become a lien on the unit within a specific timeframe. The corporation can ultimately enforce the lien through a sale of the unit to recover unpaid fees and costs. Arrears are taken seriously because every owner who doesn't pay their share forces other owners to effectively subsidize them.
How do I know if my condo fees are reasonable?
Compare against similar properties in your area (size, age, amenities, location), and look at what's included. A building with a pool, gym, concierge, and underground parking will legitimately have higher fees than a smaller building without amenities. More importantly, review the reserve fund study to ensure contributions are adequate — low fees that come with an underfunded reserve are not actually a good deal.
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