Buying a Downtown Condo: Fees, Reserve Funds and Due Diligence

Buying a downtown apartment is two purchases in one. You buy a unit — the floors, walls and windows you'll live with every day — and you buy into a building: its finances, its rules, its maintenance history and its future repair bills. The unit is easy to judge on a viewing. The building takes reading.

Most of the risk in a downtown condo purchase lives in documents that buyers skim: the budget, the reserve study, the board minutes and the rules. This guide explains what each one tells you, how the main ownership structures differ, and what to check before you commit.

What you're actually buying

Shared-building ownership goes by different names around the world, and the differences matter for your rights, your costs and your ability to sell or rent.

Condominium

You own your unit outright, plus a share of the common elements: lobbies, elevators, roof, structure and amenities. A condominium corporation or homeowners' association, run by an elected board of owners and usually a professional manager, maintains the shared parts and collects monthly fees. This is the standard model across most of the United States and Canada. In Québec, the equivalent is called divided co-ownership.

Strata title

Strata is the term used in British Columbia, Australia and Singapore, among other places. The mechanics are similar to a condo: you own your lot and share the common property, which is run by a strata corporation, owners corporation or body corporate with an elected council or committee.

Co-operative

In a co-op, common in New York City, you don't buy real property. You buy shares in a corporation that owns the building, and the shares come with a proprietary lease on your apartment. The board usually approves every buyer, often after a detailed financial review and an interview, and it can say no. Monthly maintenance typically includes your share of the building's property taxes and any underlying mortgage, so it looks higher than condo fees for a similar unit.

Leasehold flats

In England and Wales, most flats are sold on long leases: you own the right to occupy the flat for a fixed term while a freeholder owns the building. Service charges, ground rent and the years left on the lease all affect value and mortgage options, and a short lease can be costly to extend. Leasehold law has been under reform, so take advice on the current rules.

Fees: what they cover and why they rise

Monthly fees — called condo fees, common charges, strata fees, maintenance or service charges — pay for the building's running costs and its contributions to the reserve fund. What they cover varies a lot. Some include heat, water and even electricity; others cover only the common areas. Concierge staff, pools, gyms and rooftop terraces all add to the bill.

Compare buildings on what the fee buys, not on the fee alone. A low fee can mean an efficient building, or a board that has been under-funding repairs to keep owners happy. Ask for several years of fee history: steady, modest increases suggest planning, while a long freeze followed by a jump suggests catch-up.

Reserve funds and special assessments

Every building wears out on a schedule. Roofs, elevators, windows, boilers, parking-garage membranes, façades and balconies all need replacing eventually, and in a tower each of those is a large bill. The reserve fund — also called a contingency or sinking fund — is the building's savings account for them.

A reserve study estimates when each major component will need work and how much the building should be setting aside. In Ontario it's called a reserve fund study; in British Columbia, a depreciation report. Read it alongside the actual balance. If the fund is well below what the study recommends, or the study is years out of date, expect higher fees or a special assessment.

A special assessment, or special levy, is a one-off charge to owners when the reserve can't cover a cost. It is usually split by ownership share, so larger units pay more. Who pays an assessment that is approved around the time of your purchase is a matter for the purchase agreement, so have your lawyer deal with it explicitly.

Scrutiny of older towers has increased since the 2021 condominium collapse in Surfside, Florida. Florida introduced mandatory milestone inspections and structural reserve requirements for many condo buildings, and lenders and insurers elsewhere look harder at older buildings' structure and finances. Expect more questions — and ask them yourself.

The building documents to read

Ask for these early, ideally before your offer becomes firm. In many places your offer can be made conditional on a satisfactory review.

• The declaration, bylaws and rules. What you own, what you share, and what you can and can't do — pets, renovations, rentals, balconies.
• The current budget and recent financial statements. Look for deficits, rising insurance costs and owners in arrears.
• The reserve study and any updates, alongside the actual reserve balance.
• Board or council minutes for the last year or two. This is where problems surface first: a leak discussed at three meetings in a row, a dispute with a contractor, a vote to defer window replacement.
• The insurance certificate. What the building's policy covers, the size of the deductible, and what owners must insure themselves.
• The status or estoppel certificate. A formal statement of the unit's fees, arrears, planned assessments and legal actions. In Ontario it's a status certificate; in British Columbia, an information certificate (Form B).
• Engineering and building-condition reports, plus any orders or notices from the city.
• For new or pre-construction buildings: the disclosure statement, the first-year budget and the details of any new-home warranty.

Rental and short-let restrictions

If you might rent the unit out — now, or later if your job moves you — the rules matter as much as the kitchen. Look for rental caps that limit the share of units that can be leased, minimum lease terms, outright bans on short-term rentals, and board approval of tenants, which is common in co-ops.

City rules sit on top of building rules. Many cities now require short-term rental hosts to register, limit short-lets to a host's primary residence, or restrict them in certain buildings. Rules change, and a building can tighten its bylaws after you buy, so treat any rental income as uncertain. Check the ratio of owner-occupiers to tenants too: a building dominated by investors can affect financing in some markets and affects the atmosphere in all of them.

Other rules shape daily life: flooring requirements such as acoustic underlay, renovation approval processes, move-in fees, barbecue bans and pet limits. Read them as if you already lived there.

Inspections: the unit and the building

A home inspection of a condo unit is shorter than for a house but still worth paying for. A good inspector checks windows and seals, the balcony door, heating and cooling equipment, the water heater, signs of leaks under sinks and around windows, the electrical panel and any renovations — and whether they were done with permits and board approval.

The inspector won't evaluate the whole tower. The building's own reports do that. Look for the age and planned replacement dates of the roof, elevators, windows or curtain wall, boilers and chillers, the parking garage and the façade. In glass towers, window-wall seals have a finite life, and replacing them is among the largest bills a building can face.

Buying off-plan carries its own risks: completion delays, changes to the final design, and in some places an interim occupancy period during which you pay a monthly fee before the building is registered and you can take title. Check how your deposit is protected, what the warranty covers, and book a pre-delivery inspection before you take possession.

Closing costs and financing quirks

Beyond the price, budget for transfer taxes, legal or notary fees, title insurance where it's used, and adjustments for fees and taxes the seller has prepaid. Transfer taxes vary sharply: Toronto buyers pay both a provincial and a municipal land transfer tax, England has Stamp Duty Land Tax, and Australian states charge stamp duty. In Québec, a notary handles the transaction.

Lenders assess the building as well as you. They look at insurance, reserves, litigation, owner-occupancy and how much of the building is commercial space. In the United States, a building that falls outside the major mortgage agencies' guidelines — a "non-warrantable" condo — can mean a larger down payment or fewer lenders. Co-ops often set their own minimum down payment and require proof of savings left over after closing. Some co-ops also charge a transfer fee, often called a flip tax, which is usually paid by the seller.

Resale: what holds value downtown

• Layout over size. A well-planned unit with a usable living room and a real bedroom sells better than a larger one with wasted corridor.
• Light and a durable view. A view over a park or protected heritage site lasts; a view over a parking lot is a future tower.
• Parking and storage. Where they are scarce, a deeded space or locker adds to resale appeal.
• Fees relative to similar buildings. Buyers compare monthly cost, not just price.
• Rental flexibility. Restrictive rules shrink your pool of buyers to owner-occupiers.
• Reputation. Buildings known for leaks, disputes or poor management trade at a discount.
• The supply pipeline. New towers nearby offering similar units will compete with yours when you sell.

Transaction costs mean buying usually only beats renting if you stay for several years. Our rent vs. buy calculator shows your break-even point, and our guide to choosing a downtown building compares building types on noise, light and fees.

Your due-diligence checklist

Check	What good looks like	Red flag
Reserve fund vs. study	Balance close to plan; study recent	Fund far below plan; study years out of date
Fee history	Steady, modest increases	A long freeze then a jump; fees far below similar buildings
Special assessments	None planned, or fully disclosed and funded	"Upcoming costs" in the minutes with no plan to pay
Board minutes	Routine business; issues resolved	Repeated leaks, contractor disputes, deferred repairs
Insurance	Adequate cover; a deductible you could absorb	Very large deductibles passed to owners; renewal trouble
Litigation	None, or minor	Claims against the developer, or owners against the board
Arrears	Few owners behind on fees	Many owners in arrears
Rental rules	Match your plans	Caps, bans or bylaw changes under discussion
Major components	Recent or funded replacements	Windows, garage or elevators near end of life with no plan
Unit inspection	Minor wear	Water staining, failed seals, unpermitted renovations
Management	Professional and responsive	Frequent manager turnover; unanswered owner complaints

Work through the list with your lawyer or notary and, where you have one, your realtor. If you'd like to be matched with a vetted local realtor or a mover for the big day, tell us about your move.

This guide is general information, not legal, financial or real-estate advice. Ownership rules differ by province, state and country; have a local lawyer or notary review any purchase. Read our editorial policy and disclaimer.