Key Red Flags for Condo Buyers in Canada’s Shifting Market

The average price of condos has declined in several major Canadian cities over the past year, rekindling interest among prospective homebuyers and investors.

However, leading experts interviewed by The Epoch Times caution that price is only one piece of the puzzle when considering a condo purchase.

While reviewing condo fees is a standard step for most buyers, experts say other critical details—often buried in the fine print—can be easily overlooked, even by seasoned real estate professionals.

Price Tag Isn’t Everything

The average selling price of a condo in Canada was $469,300 last December, marking a 5.5 percent dip from the previous year.

Mortgage broker Ron Butler said buyers need to be especially cautious when purchasing new condos because maintenance fees can rise significantly over a short period of time.

“Be very aware that if you’re buying a new condo … you could expect a 45 percent increase in monthly maintenance fees over the course of the first five years,” Butler told the Epoch Times, describing such hikes as almost a “universal truth.”

He said the increases are common because developers often underestimate projected costs “to make it look more attractive on the offer sheet.”

Condominium Home Owners Association of B.C. executive director Tony Gioventu also stressed the need to be wary of deceptively low fees. He noted that unusually low annual fees in older condo buildings can be a significant red flag, often signalling deferred maintenance or neglected repairs—issues that can ultimately result in sharply higher levies for owners in the future.

“What could have been probably done for one amount five years ago, if you have let it go that long, is probably three or four times that amount today, if not more,” Gioventu said in an interview.

Practical Checks

Gioventu and Butler both recommend starting with several practical due-diligence steps, including confirming the building’s age and carefully reviewing its bylaws and restrictions.

Key questions to consider include whether there are age or guest limitations, what the pet policies allow, and whether electric vehicle charging stations are available, if needed. They also advise conducting an online search and reviewing news coverage from recent years to determine whether the condo corporation has faced disputes, financial concerns, or other potential red flags.

Gioventu noted that older buildings can come with substantial upgrade costs, especially if they were built prior to the implementation of more modern building regulations.

Gioventu pointed to B.C., where construction standards were overhauled after the province’s leaky condo crisis. Many condos erected in B.C. from the mid-1980s to the early 2000s were not built to withstand the wet climate, resulting in considerable damage to numerous buildings.

The Homeowner Protection Act of 1998 introduced a series of reforms in British Columbia, including a requirement that residential builders be licensed by BC Housing. The legislation also mandated third-party warranty insurance coverage for all newly constructed homes.
“I can confidently say that since the mandatory warranty program came into effect, we did see a substantial increase in building in both science and in building construction,” Gioventu said. “The standard vastly increased and so newer buildings from 2000 onward definitely are performing better.”

However, even condos built at the higher standards need to be judged according to their age because older buildings are more likely to need upgrades, Gioventu said.

Reserve Fund Study

When considering a condo purchase, Gioventu also recommends asking for the building’s most recent reserve fund study, sometimes known as a depreciation report.

These reports identify the building’s major components, estimate when repairs or replacements will likely be required, and project the associated costs. To prepare for those expenses, strata corporations maintain a reserve or contingency fund to help cover future capital repairs and replacements.

Gioventu cautioned that if the reserve fund amount is low compared to the projected costs of repairs and replacements, it’s a sign the condo may be in for sharply hiked fees as repairs become inevitable.

Gioventu advised reviewing the report’s 10-year plan and identifying what repairs are essential, what they’re expected to cost, and then compare those figures with the amount currently set aside in the reserve fund.

Butler also said it’s important to check that reserve funds are being sufficiently funded for newer buildings as initial budgets often underestimate true operating costs, leaving contingency funds underfunded and ill-prepared to cover anticipated expenses in the years ahead.

In B.C. and most other provinces, strata corporations are required to obtain a reserve fund report, update it every five to 10 years, and make it available to owners or prospective buyers upon request.

Exceptions include Saskatchewan, Prince Edward Island, Newfoundland and Labrador, as well as the three territories, where such reports are not mandated under provincial or territorial legislation.

Even in jurisdictions where depreciation reports are not legally mandated, some strata corporations voluntarily commission them as a tool for long-term planning and responsible property management.

A strata corporation serves as a legal entity that represents all owners within a shared property, such as condominiums, for the purpose of managing common property and assets.

Check Insurance

Butler and Gioventu said another critical, but often overlooked element buyers should check is the insurance policy and claims history of the condo corporation.

Most buildings have a master insurance policy covering structural and basic insurance matters, but the details are key, Gioventu said. A high deductible, for instance, is often a signal the building is viewed as higher risk.

“For example, if the insurance deductible is $250,000 it’s a pretty clear indication they’ve had a number of significant claims,” Gioventu said. “I have one strata that I’m dealing with right now in Metro Vancouver. They have five active claims this year, and a lot of it has to do with their negligence. And it will be a miracle come next year if they can get their insurance renewed.”

Butler also said as insurance premiums increase, the expenses are frequently mirrored in higher fees. This is why he suggests asking for a copy of the insurance claims history, something Gioventu also described as a crucial step.

“That insurance summary will tell a lot,” Gioventu said.

Management and Legal Issues

Gioventu emphasized the importance of examining who manages the building, noting that condominiums operated by professional firms do not necessarily guarantee superior management.

The rate of problems in condos managed by professional firms is no better than in self-managed buildings, he said, adding some condos with chronic issues and cost increases have churned through a long list of management firms.

Gioventu also strongly advises reading over strata meeting minutes to find potential legal issues that could crop up. He said patterns of unresolved disputes, delayed maintenance needs, high turnover on the strata council, and legal complaints are issues to look out for.

Gioventu added that prospective condo buyers should also visit the relevant civil resolution tribunal website to check for activity involving the building.

“If there’s a bunch of decisions from the tribunal, it might be an indication there’s a lot of conflict in the strata. You don’t want to be buying into a place that’s riddled with conflict,” he said.

Past Renos

Asking about past alterations to the condo unit, especially for work done without permits, is vital, Gioventu said. Unauthorized work done on plumbing, for example, can leave new owners responsible for the strata’s deductible in the event of a flood or plumbing problem.

If an alteration was approved by strata, it should appear in strata documents provided to buyers. However, Gioventu cautions that unauthorized work may not appear in records. He said it’s particularly important for buyers to ask about any past alterations to the unit’s plumbing, wiring, electrical, or changes to load-bearing beams and walls.

Rules vary by province, but the Property Disclosure Statement in B.C. requires the seller to be honest about any work done. The document is not mandatory, but any seller who leaves out or falsifies information about past work on the unit can be legally liable for damages. Proving the seller knew about it, however, is difficult and legal action can be costly.

The Bottom Line

Attractive pricing and location along with relatively low monthly condo fees can look too good to be true, and all too often, it is, Gioventu and Butler both noted.

Even with thorough due diligence, Gioventu said it’s important to remember that condos may not be as cheap as they appear once all costs are factored in.

“People get into condos because they cost less than housing to purchase, with the impression that they’re cheaper to operate, and they’re not,” Gioventu said, adding that condos can end up costing about the same “or more” over time.