Condo vs. Freehold

One of the biggest decisions you will face as a first-time buyer is whether to buy a condominium or a freehold property. Each has distinct advantages, costs, and legal considerations. The right choice depends on your budget, lifestyle, maintenance tolerance, and long-term goals.

Freehold Properties

With a freehold home, you own both the building and the land it sits on. You are fully responsible for all maintenance, repairs, and improvements. There are no monthly condo fees, no condo board rules, and no shared decision-making about the property.

Advantages of freehold ownership:

• Full control — You decide when to renovate, what colour to paint, whether to build a deck, and how to landscape. No board approval required.
• No monthly condo fees — Your ongoing costs are limited to property taxes, insurance, utilities, and maintenance you choose to do.
• Greater privacy — No shared walls (for detached homes), no shared hallways, and no neighbours above or below you.
• Land value appreciation — In most Canadian markets, the land beneath your home appreciates faster than the building itself. This is a significant long-term wealth-building advantage.
• Renovation freedom — Subject to local permits and zoning, you can modify your home as you see fit, including additions, basement apartments, or garage conversions.

Disadvantages of freehold ownership:

• Higher purchase price — Freehold homes cost significantly more than comparable condos in most markets. In Toronto, a detached home averages over $1.3 million, while a condo apartment averages around $700,000.
• Full maintenance responsibility — You pay for everything: roof replacement ($8,000-$15,000+), furnace repairs ($3,000-$8,000), driveway resurfacing ($2,000-$5,000), and all other upkeep.
• Larger down payment needed — A higher purchase price means you need more savings upfront. On a $900,000 freehold, the minimum down payment is $55,000 (5% on the first $500,000 plus 10% on the remaining $400,000).
• Time commitment — Lawn care, snow removal, gutter cleaning, and general property maintenance take real time and effort.

Condominium Properties

When you buy a condo, you own your individual unit and share ownership of the common elements — hallways, lobby, elevators, parking structures, amenities, the building envelope, and the land — with all other unit owners. A condominium corporation (Ontario and most provinces) or strata corporation (British Columbia) manages the building on behalf of all owners.

Advantages of condo ownership:

• Lower entry price — Condos offer the most affordable entry point into homeownership in expensive urban markets. In Vancouver, a one-bedroom condo might start around $500,000, while a detached home starts above $1.5 million.
• Amenities — Many buildings offer gyms, pools, party rooms, rooftop terraces, co-working spaces, and guest suites at a fraction of what these would cost individually.
• Exterior maintenance handled for you — Snow removal, landscaping, building repairs, and common area cleaning are managed by the corporation.
• Security — Features like concierge service, security cameras, key fob access, and controlled entry provide added peace of mind.
• Location — Condos are typically built in urban centres close to transit, employment, restaurants, and entertainment.

Disadvantages of condo ownership:

• Monthly condo or strata fees — These fees are an ongoing cost that ranges from $250 to $1,000+ per month depending on the building, its age, and its amenities.
• Less privacy — Shared walls, floors, and ceilings mean you will hear your neighbours, and they will hear you.
• Rules and restrictions — Condo boards can impose rules about pets, noise, rentals, balcony use, renovations, and more.
• Risk of special assessments — Unexpected charges of thousands or even tens of thousands of dollars per unit.
• Potential for mismanagement — A poorly run condo board can let the building deteriorate, underfund the reserve, or create a hostile living environment.

Understanding Condo and Strata Fees

Monthly condo fees are one of the most important factors to evaluate when buying a condo. They cover the shared costs of running the building and typically include:

• Building insurance — Covers the structure and common elements (not your unit contents or personal liability — you need your own condo insurance policy for that)
• Common area maintenance — Cleaning, lighting, and repairs in hallways, lobbies, elevators, and shared spaces
• Landscaping and snow removal — Exterior grounds maintenance
• Reserve fund contributions — Money set aside for future major repairs and replacements
• Water — Usually included in condo fees; some buildings also include heat
• Amenity upkeep — Maintenance of pools, gyms, party rooms, and other facilities
• Property management fees — The company hired to manage the building’s day-to-day operations

Fees vary widely depending on the building:

Building Type	Typical Monthly Fee Range
New low-rise (under 10 years)	$250 - $400
Mid-rise (10-20 years)	$350 - $600
Older high-rise (20+ years)	$500 - $900+
Luxury high-rise with full amenities	$700 - $1,200+

Tip

When comparing condos, always ask what is included in the fee. A condo with a $600 monthly fee that includes heat, water, and building insurance may actually cost you less per month than one with a $350 fee that covers none of those — because you would be paying for heat, water, and insurance separately on top of the lower fee.

Special Assessments — What They Are and Why They Matter

A special assessment is an additional one-time charge that the condo board levies on all unit owners when the reserve fund does not have enough money to cover a major repair or unexpected expense. These charges are divided among unit owners, usually proportional to their unit size (based on the unit’s percentage of the common elements).

Special assessments can range from a few hundred dollars to $30,000, $50,000, or even more per unit for major building-wide projects. Common triggers include:

• Roof replacement — $500,000 to $2 million+ for a large building
• Elevator modernization — $150,000 to $300,000 per elevator
• Parking garage waterproofing and structural repair — Often $1 million+ for underground garages
• Window and balcony restoration — $5,000 to $25,000+ per unit in older high-rises
• Plumbing system overhaul — Replacing aging pipes throughout a building can cost millions
• Building envelope repairs — Cladding, insulation, and waterproofing failures

Caution

Special assessments can be financially devastating for unprepared buyers. Before purchasing any condo, always review the reserve fund study and check for pending or recently completed special assessments. A building that has just completed a major assessment may have addressed its biggest issues — but one with an underfunded reserve and aging infrastructure could be heading for trouble.

Reserve Fund Studies

Every condominium corporation in Canada is legally required to maintain a reserve fund — money set aside for major repairs, replacements, and capital improvements. A reserve fund study is a professional engineering assessment of all the building’s major components and the money needed to maintain, repair, and replace them over a planning horizon of 25 to 45 years.

Reserve fund studies are updated every three years in most provinces (Ontario, BC, Alberta). When reviewing a reserve fund study before buying a condo, pay attention to:

• Current fund balance — Is the reserve adequately funded for the building’s age and condition? A 20-year-old high-rise with only $200,000 in reserves is a red flag.
• Projected fee increases — The study will recommend future contribution increases. If the study recommends annual fee increases of 10-15% to catch up on underfunding, your monthly costs will rise significantly.
• Upcoming major expenses — Look at the replacement schedule. Are there $500,000+ expenses projected in the next five years? Is there enough money to cover them?
• Funding shortfall — Does the study identify a gap between the current balance and what is needed? A significant shortfall almost always leads to either steep fee increases or a special assessment.

A well-managed building will have a healthy reserve fund, a clear maintenance schedule, and fee increases that are moderate and predictable. A poorly managed building will have deferred maintenance, chronic underfunding, and the looming threat of special assessments.

Status Certificates (Ontario) and Form B (BC)

Before buying a condo, your lawyer should review the building’s key disclosure documents. These are critical — they reveal the financial and legal health of the condominium corporation.

Status Certificate (Ontario)

In Ontario, the status certificate is a comprehensive document package that the condo corporation must provide upon request. It includes:

• Audited financial statements
• The current reserve fund study
• The corporation’s declaration, by-laws, and rules
• Board meeting minutes (usually the last few sets of minutes)
• Details of any pending or ongoing litigation
• Information about any planned or pending special assessments
• Insurance certificate
• Any outstanding maintenance fees or liens

The condo corporation must provide the status certificate within 10 days of a request, for a fee of approximately $100. Your real estate lawyer will review this document in detail and flag any concerns.

Form B Information Certificate (British Columbia)

In BC, the equivalent disclosure is the Form B Information Certificate from the strata corporation. It provides similar information about the strata’s financial health, contingency reserve fund, monthly fees, rules and bylaws, and any outstanding or anticipated legal actions or special levies.

Tip

Always make the review of a status certificate or Form B a condition of your offer when buying a condo. This is one of the most important due diligence steps in the condo buying process. Your lawyer may identify issues that completely change your assessment of the property — from undisclosed litigation to an underfunded reserve that virtually guarantees a future special assessment.

How Condo Fees Affect Your Mortgage Qualification

Condo fees directly impact how much mortgage you can qualify for. Lenders include 50% of your monthly condo fees in their calculation of your housing costs when determining your Gross Debt Service (GDS) ratio.

For example, if your monthly condo fee is $600, lenders add $300 to your monthly housing cost calculation. This effectively reduces the maximum mortgage you can qualify for. Here is a simplified comparison:

Scenario	Freehold	Condo ($600/month fee)
Monthly mortgage payment	$2,200	$2,200
Property tax (monthly)	$350	$250
Heat (monthly)	$150	$0 (included)
50% of condo fee	$0	$300
Total housing cost for GDS	$2,700	$2,750

Even though the condo owner may pay less in total real costs (no maintenance, heat included), the GDS calculation treats condo fees as an additional burden. This means that high condo fees can reduce your purchasing power, effectively lowering the maximum purchase price a lender will approve.

Caution

When shopping for condos, factor in how the fees affect your mortgage qualification — not just your monthly budget. A building with $800 per month in condo fees adds $400 to your GDS calculation, which could reduce your maximum affordable purchase price by $50,000 or more depending on current interest rates.

Choosing between a condo and a freehold is ultimately about your priorities. Condos offer affordability and convenience; freehold properties offer control and long-term land value appreciation. Neither is inherently better — the right choice depends on where you are in life and what matters most to you.

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Next: What to Look for at Showings