What Are Condo Fees (and How Are They Set)?

What They Are

Condo fees are pooled funds collected from unit owners to cover the shared costs of running and maintaining the building. Since condominiums are not-for-profit corporations, the goal is to balance expenses and revenues. Spending just enough to maintain the building without generating income.

What’s Typically Included

Most condo fees are divided into five major categories:

• Administrative

• Contractual Agreements

• Common Area Maintenance

• Professional Fees

• Utilities

These categories can be further broken down into specific expenses such as:

• Condominium Authority of Ontario (CAO) fees

• Office supplies

• Landscaping and pest control contracts

• Door and HVAC repairs

• Audit and legal fees

• Condominium management services

• Hydro, water, gas

• Reserve fund contributions

The exact breakdown depends on your building’s Condominium Declaration, which outlines what’s included in your common expenses.

How Condo Fees Are Set

Every year, your condo board, usually with input from a professional property manager, prepares an annual budget. This budget reviews prior year spending, incorporates known contractual increases, and projects future costs. Special attention is given to utility usage, maintenance needs, and reserve contributions.

Fees are then calculated by dividing the total projected expenses across all units, based on their percentage of common expenses outlined in the Condominium Declaration.

Reserve Fund Contributions

Reserve fund contributions are a major component of your condo fees. Under the Ontario Condominium Act, a condo must conduct a Reserve Fund Study (RFS) within the first year of incorporation and then update it every three years.

There are three classes of RFS:

• Class 1: Full physical inspection (required in Year 1)

• Class 2: Site visit update with revised estimates

• Class 3: Financial update only

After the first Class 1 study, the building alternates between Class 2 and Class 3 every three years. These studies determine how much needs to be saved annually to pay for major future repairs like roofs, elevators, and exterior cladding, which is why reserve contributions often represent the largest portion of your condo fees.

FAQs: Understanding Condo Fees

1. What’s a reasonable amount to pay in condo fees per unit?
It depends on your building’s age and services, but $15–25 per unit per month for maintenance is a healthy baseline. Buildings under 25 years old often fall in the $15–19 range, while older buildings typically require $20–25 to cover increased upkeep.

2. What do reserve fund contributions usually cover?
They cover major capital expenditures such as roof replacement, window upgrades, elevator modernization, and other large-scale repairs that don’t occur annually.

3. How often do condo fees increase?
Many boards raise fees by 2–4% annually to keep up with inflation and planned capital needs. Strategic, small increases are healthier than large, reactive ones.

4. Can condo boards reduce fees if expenses drop?
Technically, yes, but it’s rare. Most boards use surpluses to reinforce reserves or handle deferred maintenance. A small surplus is often safer than cutting fees too tightly.

Wanting to learn more about condo fees? Here are some other helpful articles:

1. How Condo Fees Are Calculated: A Guide for Board Members in Sarnia and London