No Fixed Address: What to watch out for when it comes to condo fee increases

Paul Foggiahadborrowed to hislimit and was living at the edge of his budget when he purchased a brand new condo in downtown Toronto in2012.

"As soon as I walked in, that was it," he said. "You walked outside, you could see the whole Harbourfront Centre. It was just beautiful."

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But that beautybecame a beast to pay for. The debt-laden Toronto man saw his maintenancefees jump by 20 per cent over three years.

When they hit $500 a month in August 2015, he says he had no choice but to move and rent out his condo.

"I knew [condo fee increases] were going to happeneventually, but I never thought it was going to be as much as what happened," he said.

"You wake up in your condo and then you're going to bed at your grandparents' place. I remember just shaking my head on their couch saying, 'What did Ido?'" he said. "It sucks, but that's the way it is."

The 33-year-old contacted CBC Toronto'sHousing WoesFacebook groupto make others aware that they could face the same situation.

"This happened to me, and there's so many buildings going up so quick, this has to be happening to more people," he said.

No Fixed Address: Condo fee increases

8 years ago

Duration 1:12

Paul Foggia saw his maintenance fees hump 20 per cent over three years at his Harbourfront condo.

'Big increase in common expenses'

Foggiasaid common spaces throughout his building were constantly breaking downincluding theBBQs, the treadmills and the hot tub and other construction issues in the parking garage. The building's management attributed the fee increases to those issues, he said.

Real estate lawyer Lauren Blumas said she advises clients to look into pastincreases in a condo building before buying, but that's obviously not possible if you're buying into a new build like Foggiadid. Foggia's fee increases, however,soundedunusually high, Blumas told CBC Toronto.

"That sounds to me like, in part, a mismanagement of that property that's causing a dramatic increase," the lawyer said. "That's a big increase in common expenses."

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But HarryHerskowitz, a lawyer who specializes in the Condominium Act, said itcan be very difficult toanticipate how much fees will climb, especially in terms of utility consumption and maintenance on a new building.

"I don't want to say it's mismanagement, but maybe they had to spend money on repairing something, maybe something wore down prematurely,and there was an inadequate reserve fund," he said.

Herskowitzsaid if a condo board attempts to boost maintenance fees by more than 10 per cent in a year, that's considered a "material change" and the purchaser can get out of the condo agreement. Most owners, however, can't afford to do that, he said.

"The difficult part is when you see a market like we've had in the last 10 years, if you pull out because of common expense increases, you're going to lose the equity you've earnedover the last years,"Herskowitzsaid.

Time limits on home warranty

There is some protection for buyers, but it's limited.

Defects with new homes, including condos, are covered in Ontario by a government-mandatedwarranty called Tarion.

The not-for-profit companywill try to resolve disputes between the builder and the homeowner, or will pay when something under the warranty needs to be fixed.

Major structural defects are covered for seven years, but smaller issues,like those detailed byFoggia, are under warranty for one or two years.

By year three, if there are defects that are discovered, it's on the condo board to deal with it.- SafiaLakhani,real estate litigator

According to records obtained from Tarion, the warranty start date for the common elements of Foggia's building was November 2011.

"Tarion coverage will handle deficiencies throughout year one and two, but by year three, if there are defects that are discovered, it's on the condo board to deal with it," said real estate litigator Safia Lakhani, who specializes in construction law.

Lakhani said she would be particularly concerned for people looking to sell their condos after consecutive fee increases, or major defects found after the warranty has lapsed.

"In terms of selling, you're in a mess because the status certificate, which you have to produce for potential buyers, will clearly say we did a reserve fund study on this date and these are the anticipated costs of doing the work the building needs."