Purchasing a Condominium in Nova Scotia

The following is a general overview of some of the issues which may arise when purchasing a condominium unit.

What am I buying?

In Nova Scotia, the creation of a condominium complex is governed by the Condominium Act (Nova Scotia). A condominium corporation is made up of separate ownership of individual units in a multiple unit building. What you buy is a self-contained unit. In a high-rise building, your unit includes that area horizontally and vertically between the walls, from the bare floor under your carpet or hardwood floor to the ceiling. The walls that support the entire building are not included in your unit.

When purchasing a condominium unit, you are also acquiring an ownership interest in the Condominium Corporation. The Condominium Corporation is an incorporated company that has as its object, the maintenance of the property of the complex. A unit owner is in a similar position to that of a shareholder in a corporation. Each unit owner has a vote in the running of the corporation but not all the unit owners' votes are equal. They may vary according to the size of the unit or other factors. The Condominium Corporation looks after the day to day running of the condominium complex and often will hire a management company to look after some of its operations for it.

When purchasing a condominium unit, you are also purchasing a percentage interest in the common elements of the building. Common elements means all the property in the complex except the individual units. You will also have the right to the exclusive use of certain common elements, such as a balcony or a deck. You do not own these items because they do not fall within the area of your unit, however, you are granted the exclusive right to use those common elements to the exclusion of other owners.

Are there any restrictions on the use of a condominium unit?

The use to which you may put your condominium unit is restricted by the Declaration and the Bylaws of the condominium complex. The Declaration sets out the rights, privileges and restrictions that a unit owner has. For example, The Declaration may prohibit operating a business from the unit, or it may restrict your right to lease your unit, or even prohibit the ownership of pets in the complex.

The Bylaws authorize the Condominium Corporation to make rules and regulations relating to the use of common areas and common elements. These rules are known as the Common Element Rules. The Condominium Act requires these rules be registered with the Registrar of Condominiums in order to be enforceable.

In order to amend the Declaration, a vote of one hundred percent (100%) of all unit holders and all encumbrancers (i.e. mortgagees) is required. In order to amend or pass a bylaw it takes sixty percent (60%) or more of the owners of the common elements to approve. It takes a vote of a majority of unit owners present at a meeting to pass Common Element Rules.

It is important that you read the Declaration, Bylaws and Common Element Rules carefully when purchasing a condominium. The standard form of agreement of purchase and sale provides that the seller shall provide to the buyer a copy of the most recent financial statements and the Declaration, Bylaws and Common Element Rules and Regulations of the Condominium Corporation and that you be given an opportunity to review these documents to determine whether there is anything contained in those documents that would materially affect your enjoyment of the property. If you have any objections to the documents, you must raise those objections within the time frame provided in the agreement.

Monthly Fees Payable to the Condominium Corporation

The monthly condominium fees paid by you as a unit owner to the Condominium Corporation are used to maintain the buildings and common elements and to pay day to day operational expenses. A portion of the fee you pay goes into a reserve fund which is used for larger expenses required in the future. Such expenses might include a new roof, paving, structural repair to the building(s). The standard agreement of purchase and sale provides that the seller warrants and represents to the buyer the amount of the monthly common expense fee. These monthly fees are similar to taxes and can be expected to increase in the future.

If you are purchasing a condominium in a new complex, your agreement of purchase and sale may require you to pay a sum in advance toward common element fees to be held together with the amounts similarly deposited by other unit owners and to be applied from time to time towards the deficits and other common expenses as the Corporation deems necessary.

Parking Spaces

In some condominium corporations the use of parking spaces are treated as exclusive use common elements and a certain parking space is assigned to a unit according to the Declaration. Therefore when you purchase your unit you are automatically assigned a parking space. In other cases, the parking space may be deeded to you separately. In this case you must ensure that you receive the deed for the parking space at the same time that you receive the deed for the unit itself. Still in other cases, you may have to enter into a lease of the space with the Condominium Corporation which may be subject to the availability of spaces.
You should make enquiries as to the allocation of parking spaces when initially viewing the property and in include the appropriate provision in your agreement of purchase and sale.

Insurance

The Condominium Corporation is required to maintain insurance on the complex as a whole. It is your responsibility to have adequate condominium owners insurance on the unit. If you are mortgaging your unit, you will be required to provide your lawyer with confirmation of insurance listing the financial institution as a loss payee effective 12:01 on the closing date.

Real Property Taxes

You will pay real property taxes on your unit as if it were a single family dwelling. If the unit you are buying is in a brand new complex, the property may still be assessed in the name of the developer. Some agreements of purchase and sale for new condominium units provide that the real property taxes applicable to the unit be estimated for the calendar year and adjusted on closing and that they be readjusted upon the actual amount of the real property taxes being ascertained.

The above information is intended to be a general overview of some of the issues that arise in relation to the purchase and sale of a condominium unit. For more detailed information and advice, a lawyer should be consulted. Auld Allen would be pleased to discuss any issues with you relating to the purchase or sale of your condominium.

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