Condo-Smart

Posts Tagged ‘Budgets’

The simple answer is yes.  Let’s say you have a condominium complex with two  housing types.  For instance – an apartment block and townhouses or villas.  Or it could be commercial units on the main floor and apartments above. Because there are different needs for each housing type or use,  often there will be a budget for each.  Contributions will be assessed according to the unit  factors belonging in each type.  How does this work?  Well, lets take the apartment/townhouse scenario.  The budget amount owed by the unit owners living in the apartments is $100,000.  The units factors in the apartments totals 4900.  The budget amount owed by the unit owners living in the townhouses is $50,000.  The unit factors in the townhouses totals 5100.  Here’s the formula.

budget/unit factors=cost per unit factor.  This will give you the annual cost per unit factor.  Multiply that by the unit factor assigned to the respective unit and you have the annual cost to the unit owner.  To give you the monthly assessment, just divide by 12.

So if you had an apartment unit with a unit factor of 125 – then

$100,000/4900=$20.41 per unit.  Multiply $20.41 by 125 and you have $2551.25.  Divide that by 12 and you have a monthly contribution of $212.60.

What’s the formula for figuring out what I need to pay each month?

In Alberta  each corporation has a total of 10,000 unit factors.  And what is a unit factor?  Well, think of them as shares in the corporation.  Because all condominium corporations operate as non-profit organizations, they really don’t have shares in the true sense of the word.  There are no dividends issued etc.  But as a unit owner, you will own a “share” of the condominium corporation. So to avoid confusion in condominiums the number of “shares” of the corporation owned by unit owner is called the unit factor. (think of factor as a fraction of 10,000)

On the registration of the corporation (or subsequent division of the units as is the case of phased development) each unit is assigned a number of unit factors as a portion of 10,000.

So let’s take a unit in a high rise apartment.  The unit has been assigned 146 unit factors.  This means the unit owns 146/10,000 of the corporation.  And because the corporation owns the common property and the unit owners own the corporation, by default, the unit  is responsible for 146/10,000 of the overall amount needed by the unit owners to maintain the common property.

So, for example,  if the annual amount needed by the unit owners to maintain the common property  is $225,000 and the unit owns 146 of the factors – then to calculate the amount owned by the unit owners one needs to know first what the cost is to each unit factor.  To arrive at that – just divide the annual budget by the total number of unit factors (10,000).  In this case, each unit factor owes $22.50 per year.  To find out what the unit owning 146 unit factors owes, multiply $22.50 by 146 or $3285 annually.  Now, divide by 12 and you get the amount owed monthly or $273.75

(budget/10,000)x total unit factors owned by the unit = annual contribution needed.  Now divide by 12 and you have the monthly amount.

Answer – as often as is necessary. The Board has the mandate to ensure there is enough money in the bank to pay the bills. They assess the fees and collect the money from each unit based on the yearly budget. Hopefully they are able to stay within the set budget but in the event they are unable to – they will need to go back to the unit owners and ask for more money – even if they are mid point through the year. Most Boards very good about trying to stay within the budget and don’t raise the fees on a whim. They are unit owners too. An increase in fees means they will have to pay as well. But – utilities may go up – increased snow removal cost, insurance, landscaping, unexpected repairs and maintenance etc. can all impact on the amount needed to pay the bills. The shortage must be covered.