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The Essential Guide to Understanding Condo Fees

Condominium fees are collected every month but how many owners understand how the money is used?

Contrary to what many people might think, condo fees go towards much more than supporting amenities. While every building has a unique set of needs, condominium corporations typically have three major uses for their collected fees:

  1. Utilities and Services: Condo fees typically go towards paying for utilities such as water, electricity, steam and gas for the common areas. In addition, some condos may offer additional services like security, concierge, or garbage removal, which are supported by these fees.

  2. Maintenance and Repairs: One of the main purposes of the collected condominium fees is to cover the costs of maintaining and repairing the common areas and amenities within the condominium complex. These expenses can include landscaping, cleaning common areas, elevator maintenance, amenity upkeep, and much more.

  3. Reserves and Contingencies: A portion of condominium fees are typically used to build up the reserve and contingency funds to cover future expenses like major repairs or replacements of shared equipment, appliances, and building components. This reserve fund process helps to ensure the condominium can maintain its value and expected functionality over time.

Condominium fees are typically deposited into two different areas: 1) the operating fund, and 2) the reserve fund. The operating fund is expected to have sufficient funds to cover day to day expenses for the next 12 months. The reserve fund deposit amounts will typically follow the recommendations outlined in the 🌐Reserve Fund Study.

Every year, a condominium board approves an annual budget for the upcoming fiscal year, many considerations are included, such as the projected revenue and expenses the condo should expect for the next 12 months. Both funds assume that the budget projections, after review and approval by the board, will grow inline with expectations.

The Operating Fund

The 🌐operating fund is used to pay for all costs related to the operations of the condominium corporation on a day-to-day basis. The operating fund is guided by the approved budget and attempts to follow it as closely as possible. Any differences between the operating fund and the budget will have to be addressed by the budget in future years.

The following are some examples of expenses that an operating fund may be used for:

  • On-site Personnel – concierges, cleaning staff, etc.

  • Services – grounds, maintenance, security, etc.

  • Utilities – steam, water, gas, hydro, etc.

  • Property Management – salaries, office supplies, technology, etc.

  • Administration costs – audit fees, telephone and insurance premium, legal fees, etc.

The Reserve Fund

The 🌐reserve fund is responsible for major repairs and replacements for the common elements of a condominium. These might include an elevator replacement, window or roof replacement(s), or for the parking lot to be repaved. The purpose of this fund is to ensure that is sufficient money to pay for these critical future repairs and replacements. If the reserve fund does not contain sufficient money to fund these repairs, the condo board will be forced to collect a one-time levy from condo owners to pay for these repairs.

Allocation of Funds

The following chart shows a typical usage breakdown of your condo fees. This distribution varies depending on the building location, size and type, but this chart offers a glimpse of the breakdown.

The values used in the diagram were taken from data collected from a set of buildings in the downtown Toronto area and as a result are more representative of breakdowns for high-rise condominiums.


Condo fees may be used in slightly different ways depending on the specifics of the condominium. The goal of this article was to help illustrate to new condo owners how these fees are typically used.

While not addressed in this article, an observant reader may have noticed that condo fees are not immune to the impacts of price inflation. For more on this topic, we suggest reading the following article: 🌐Decoding Inflation: How It Impacts Your Money.


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