How to Manage Rising Condo Fees in Co-Ownerships

Increasing condo fees is often a sensitive issue in co-ownerships, especially in small, self-managed co-ownerships where each co-owner is often involved in the financial management of the building.

How can realistic fees be set without causing tension? How can we ensure that the co-ownership remains in good financial health by avoiding sudden increases?

Here is a clear guide to managing this situation calmly and effectively.

Since the latest updates regarding the coming into force of Bill 16, condominiums in Quebec have become more aware of their obligations than before September 11, 2024. Why? To encourage more rigorous financial management.

The law will notably require:

• A mandatory maintenance logbook detailing planned and completed work.
• A contingency fund study every 5 years to ensure that financial reserves are sufficient.
• A certificate to provide greater transparency regarding the condition of the syndicate during transactions.

Condominiums must therefore adjust their condo fees to remain compliant with the new requirements and avoid special assessments.

Condo fees are used to cover a condominium's current expenses and to anticipate the cost of major work.

In particular:

• The operating fund: electricity for common areas, maintenance, insurance, etc.
• The contingency fund: major work such as replacing the roof, windows, facades, etc.
• The self-insurance fund: the amount required to pay the insurance deductible.

In a small condominium, these fees must be calculated just as carefully as in a large condominium. Fewer co-owners means fewer resources to share the costs. Poor planning can therefore jeopardize the value of the units and cause conflicts.

Some condominiums choose to keep condo fees artificially low to preserve co-owners' budgets. But in the long term, this leads to significant problems.

1. Lack of funds for maintenance: Urgent repairs (e.g. a leaking roof, cracks in the foundation, etc.) must be paid for immediately. This problem often leads to an unexpected special assessment.
2. Building deterioration and loss of unit value: A poorly maintained building loses value. Potential buyers are wary when they see an underfunded condominium.
3. Conflicts between co-owners: A large and sudden increase in condo fees after years of stagnation can create tension, especially if some co-owners have difficulty paying.

In short, it is preferable to maintain a good balance between reasonable fees and prudent management in order to avoid these situations.

The increase in condo fees is decided at a general meeting by the co-owners. The declaration of co-ownership defines the rules of financial management, but any increase must be voted on collectively.

Good practices to avoid conflicts:

✅ Present a detailed budget to demonstrate why an increase is necessary.
✅ Consult the co-owners in advance to minimize negative reactions.
✅ Apply gradual increases rather than a sudden increase.

How can we avoid disputes over fee increases?

Tensions over increased fees are common. Here are three best practices for a smooth transition.

1. Ensure full financial transparency

• Present an annual expenditure report and make it accessible to all.
• Set up a shared online file containing the building's finances.

2. Consult co-owners before making a decision

• Canvass the opinion of co-owners before the general meeting.
• Explain the increase by presenting concrete figures to avoid reactions of mistrust.

3. Apply a gradual increase

• Make up the contributions over a period of 10 years as permitted by law to avoid an abrupt increase.
• Compare the condominium fees with other comparable buildings to justify the increase.

Errors in calculating condo fees can lead to deficits and conflicts. Here are the most common ones:

• Underestimating actual costs: Forgetting inflation or increases in service costs (insurance, electricity, etc.). Failing to plan for or underestimating major long-term repairs.
• Not contributing enough to the contingency fund: Bill 16 requires an adequate contingency fund to help avoid unexpected financial shortfalls.
• Incorrect allocation of expenses among co-owners: Sometimes, certain co-owners pay more than their actual share because of an incorrect calculation.

Tip

Review the allocation of expenses every year and adjust contributions according to the condominium's needs.

Some co-owners may fall behind on the payment of their condo fees, which can weaken the financial position of the entire condominium.

Here are the steps you could take:

1. Send a formal notice, meaning that a first written reminder should be sent as soon as the first late payment occurs.
2. Charge penalties and interest on late payments to discourage abuse; some condominiums apply late fees.
3. Seek the judicial sale of a unit in the event of prolonged non-payment. As a last resort, legal action may be taken against a co-owner who refuses to pay.

That said, you should maintain a reserve to cover these delays. Normally, a well-managed condominium has a safety margin to absorb these unexpected situations. Strict but fair management helps prevent financial imbalances.

Sources:

• https://rgcq.org/actualites/cotisations-non-payees-recours-options-et-impacts-sur-la-vie-de-condo
• https://www.condolegal.com/en/your-rights/factsheets/692-collection-of-unpaid-common-expenses

Increasing condo fees is inevitable in any condominium. However, it must be carefully planned and clearly explained to avoid tensions.

✅ Transparency, consultation and realistic forecasts are the keys to sound management.
✅ A well-structured contingency fund helps avoid unexpected special assessments.
✅ A gradual increase in fees is often better accepted than a sudden increase in contributions.

Need help adjusting your condo fees? Consult Borée, a condominium expert, to help you establish sound financial planning and maintain good relationships with your co-owners.