Generally, the answer is no. It is just like going to the IRS without having a CPA by your side. Now let us examine a couple of cases where you might lease space on your own. The biggest driver is the dollar value of the lease commitment. The less space you lease and the shorter the term, the less rent that is due under the lease. Less rent means a smaller commission. A listing agent is much more motivated to lease space directly to a tenant versus having to share their commission. This is especially true for small spaces that generate small commissions. Also, if you are leasing a small space, you sometimes can't get a tenant representative to work for you because it is simply not worth their time.
A representation letter is something a tenant representative or broker will ask you to sign. It has several purposes. First, it demonstrates your commitment. Once the tenant representative or broker has that letter from you, they know that they are much more likely to get a commission on your lease. This means that they will work hard for you. In fact, a good tenant representative or broker will not do much more than a simple market survey without a signed letter. If you want to get the most out of the brokerage community, we recommend that you sign an exclusive agreement rather than working with several different agents on a non-exclusive basis.
Brokers generally work in two capacities: as listing agents or as tenant representatives. Some, if not most, do both. Meaning that they have property listings and they also work as a tenant representative. If you are working directly with the property listing agent, be sure that the broker is working for the property owner. If you hire a tenant representative that also has listings, then you need to have a very good understanding of what listings they have and what conflicts they have. For example, in addition to the fiduciary issues that come with representing both parties in a transaction, the agent will most likely make more money if you lease a space at his listing. Instead of having to split the commission, he collects both sides.
Commercial Real estate agents are typically paid by a commission upon the signing of a lease. The commission is paid by the owner of the building and is typically paid one-half upon lease execution and one-half upon tenant occupancy. The commission is most often calculated as a percentage of the lease value and usually ranges between four to six percent. For example, if a tenant signs a 3-year lease for 2,000 square feet at $20 per square feet per year, a 5% commission will total to $6,000. To further complicate matters, the agent's Broker is the one that gets paid with the commission. The Broker then pays a portion of the commission to the agent, depending on the agent's split. Commission splits range anywhere from 50/50 (most common) to 90/10 in favor of the agent. Using the sample computation, the agent would receive from $3,000 to $5,400 net.
Most owners of real estate hire real estate agents to lease their property on their behalf. The agent obtains a listing agreement, which calls for that agent to act on the owner's behalf as a fiduciary in leasing the property. The agreements are performance based, meaning the agent earns a commission upon the signing of a lease. The commission is typically paid one-half upon lease execution and one-half upon tenant occupancy. Owners of real estate can lease their own properties without having to have a real estate license. Real estate agents are also required by law to have a salesperson's license issued by the state that the agent does business and must pass an exam in order to obtain a license.
This is a major decision for the Board of Directors. We would strongly suggest that the board consult with an insurance agent and broker about the type of coverage that is available. Further, you can discuss with your lawyers as to the legal implications of not having a proper insurance and the coverage that would be appropriate from a legal perspective. In short, you as a Member of the Board of Director could be sued in your capacity as a Director or Member of the Board of the condominium corporation for an omission or error and you need to understand that your personal legal exposure to such an action and to what extent insurance coverage alleviate any concerns you have in serving as a director or member of the board.
Aside from the property unit that you owned, you should also insure any betterment to the unit that may include those installed by a previous owner and any personal belongings. It is also important to familiarize yourself with your declaration, by-laws and master policy and provide a copy to your insurance agent or broker to eliminate the possibility of any gaps in your individual coverage or duplication with the insurance the condominium corporation has. An example of betterment includes original carpeting that would cost around $2000 to replace, hardwood floor that costs about $5000. You can also insure the amount that exceeds to what the insurance covers with your condominium corporation. For example, the total betterment cost is $5,000 yet the corporation’s insurance only covers $3,000, then you can have a separate add on insurance to the remaining amount, which is $2,000.
All condominium unit owners should consider having insurance especially on liability coverage. Although the Condominium Property Insurance Act only requires the condominium corporation to get insurance, you as a unit owner should also have an insurance coverage especially if you purchase the property through a mortgage financing and the condominium declaration, in one of its prohibition, require a mandatory insurance for all unit owners.
A common misunderstanding issue at the time of turn-over for a new condominium is whether an insurance appraisal is required. It is usually assumed that a developer’s construction cost is an accurate reflection of the replacement cost of the condominium and that an insurance appraisal is not necessary. Insuring a condominium for its construction cost often will results in an under-insured or over-insured condominium property. Appraisals on Insurance coverage should also be done on a regular basis. For example, an insurance appraisal can be done prior to each renewal of the insurance policy. The reason behind this is that if a major catastrophe occurs where the property is substantially damaged and the insurance coverage is inadequate, where do the funds come from to repair and/or replace the damage? The owners could be required to pay significant assessment to facilitate the repair or replace the damaged property.
The Condominium Corporation’s insurance should cover the Corporation’s liability to repair the units and common elements after damage which can be a result from fire, accidents and other risks identified in the declaration or by-laws. This particular obligation is specified in section 50(1) of the Condominium Property Act. With this, it is therefore critical for the condominium corporation to review these documents with an insurance broker in order to identify what specific needs should be covered under the master insurance policy. In general, the condominium corporation’s obligation to repair the unit is to restore to its original state, bringing back to a state where it was originally constructed.
It is the unit owners themselves that pay for the condominium corporation’s insurance. It is not a separate account but rather it is included as part of the monthly condominium fees which is specifically allocated from the operational fund. With this, it is the duty of the condominium corporation to present proof of insurance to the entire unit owners as well to the Director of Condominiums.
Yes, and a copy of the annual financial statement must be furnished to every unit owner either by mail or personal delivery. Aside from this, Condominium Corporations must also file a copy of the financial statement to the Director of Condominiums 10 days before the annual unit owner’s meeting be conducted. It is also deemed necessary for the financial statement to be reviewed by an accountant before being presented to the unit owner’s and submitted to the Director of Condominiums. More importantly, the financial statement should contain the details of its assets and liabilities as well as the income and expenses for the year.
As prescribed under the Condominium Property Act, all developers for a new condominium project will have to pay for the approval fees depending on the size of the project. For a two – unit development the fee is $1,300 and a condominium complex with more than 50 proposed units can cost $20,500. There is also a prescribed fee for the approval of any revision, which states a one-time fee of $500 for a phase development and $400 per unit for a residential or commercial condominium complex. You should take note that the approval fee is different and separate from the Land Title Registration Fee.
First, the declarant through his agent or lawyer will advise the Director of Condominiums through a written notice which expresses his or her intentions to create a new condominium project indicating the number of proposed units and the approximate time to finish the project. Next, the Director of Condominiums will review the declaration including its survey plan, by-laws and for any revisions that are incorporated. The Director can also visit the site and check for himself the progress of the construction development. Finally, the developer must submit to the Director the approval fees and the Land Title Registration Fees coupled with the declaration and description of the condominium property.
A commercial condominium has a building complex that is intended to be divided into smaller units for commercial use. It can have more than one single detached building that will serve the same purpose. In comparison, a residential condominium also has a building complex similar with a commercial condominium but is intended for residential purposes. Some condominium complex can adopt a mixed-used approach, meaning it can be both intended for commercial and residential purposes. A phased development for condominium property is a stage by stage construction of the condominium complex where the liability of the developer will be relieved once the project has complied and finished.
As far as the Condominium Property Act is concerned, a declaration is a document that creates the Condominium Corporation. It details out their roles and responsibilities in the repair and maintenance of the common areas. It also provides an outline of the condominium’s provision regarding occupancy and utilization. It further specifies the common expenses and each individual unit owner’s proportionate interest in the common elements detailing individual owner’s percentage contribution to the overall expenses on the complex’ common areas. On the other hand, a description is a combination of a survey plan, construction and structural plans and the details of the borders of each individual unit boundary.
In case if a dispute arises between a developer, unit owner or employee of the corporation, a dialogue or meeting with the person or persons involved should immediately be conducted. For instances that the conflict involves a violation of the by-laws, the Condominium Property Act and the regulations of the corporation, a written complaint must be filed at the office of the Board of Directors. Sanctions handed down by the Board of Directors or the Condominium Corporation must be within their power or authority. If in case a higher authority or regulatory body is needed to resolve the conflict, a mediation or arbitration court can also be an option for resolution.
Daily maintenance and operation for the common areas are managed by the Board of Directors on behalf of the Condominium corporation. Some choose to have a permanent manager or service provider to do the chores for them. Payment of these service providers will come from the condominium fees that each unit owner has contributed. Regular maintenance obligations by the condominium corporation includes common plumbing, electrical, heating and air-conditioning systems, roof and wall repairs, windows and door repair, lawn, garden, recreational grounds and parking areas. Any repair works inside your unit, regardless of plumbing, electrical and the like, shall be carried out by the unit owner.
Please take note that the condominium corporation does not pay for property taxes and the unit owners will have the sole responsibility of paying their own property tax coupled with an equal percentage sharing for the incurred expenses in common areas. If you are still planning to purchase a condominium unit, you can determine the property as shown in the purchase documents but it is better to check it with the municipal government to confirm and if there are changes or increase in taxes. For example, some municipalities have lower property tax for condominiums as they exclude some services like garbage collection and snow clearing. Instead, the saved amount can help you contribute to your condominium fees, which usually covers those types of services.
No one can enter your unit not unless he or she has secured proper notice and approval from you. With regards to the advance notice, you must be given a 48-hour notice in advance before someone can enter your unit. Such notice like this will be coming from utility companies to fix a certain problem inside your unit. Depending on the by-laws, the hours of entry will be usually between 8am to 8pm from Monday to Friday only. Not unless in the event of an emergency where someone needs to go inside your unit. Aside from accidents and fire, an emergency situation can include provision of water, power and any other utility service that affects other unit owners.