What are Unit Factors in Condominiums?
Condo unit factors are used to define the portion of ownership in a condominium building or complex. They are much like ‘shares’ in a company but the company in this case is a condominium. All condos are divided up into 10000 unit factors and each owner has a certain amount of them based on the size of their portion of the common property.
Real Estate Agent Explains Unit Factors
Unit factors are set by a developer when a condominium is built. In a conventional condominium, they are typically based on the size of the units. The larger the unit, the more unit factors an owner has. The smaller the condo unit, the less a person has.
Here is an example of a building and its unit factors:
In the above example, we have 9 units in a small condo building. The total size of the building is 6540 ft2, but no matter how large or small the building is, the unit factors are always 10,000. Some units have more unit factors than others because they are larger. Basically, unit factors show the percentage ownership to two decimal places. In the chart, unit 5 is 810 ft2. This means they they own 12.39% of the condo. The chart gives the percentage ownership rounded off, but it is not as accurate as the unit factor column.
In the case of bare land condominiums, the unit factors should be determined by the size of the lot, and not by the size of the unit. Bare land condominiums are a little differently defined than conventional condominiums, but the concept is the same. If you own more of the complex, then you will have a larger unit factor and hence a larger percentage of the complex.
Why Does It Matter?
Unit factors matter a lot to a condominium owner. Since they determine how much of the common property is owned, they also determine how much the owner needs to pay for the condominium complex or building. That is, the more unit factors, the higher the condo fees and any special assessments will be.
An example:
If you own a condo with 1236 unit factors, then you are typically responsible for 12.36% of the yearly condo fees. If the condo needs to take in $65,000 per year, then you will be charged $65,000 x 0.1236 = $8034.00 per year. That is $669.50 per month for that unit. It shouldbe noted that there could be other ways to calculate condo fees, but it would be very rare to see anything but the unit factor method.
Besides the monthly cost of condo fees, another important thing with unit factors is that they do determine your voting power in a special resolution. The more factors you own, the more control you have over the future of your complex.
by +Alan F Macdonald REALTOR® | Copyright © – gimme-shelter.com
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I’m curious why the unit factor is always summed up to 10,000
No one in my office can answer this question
Hi Taylor. Unit factors add up to 10,000 because that is simply 100.00% of the building or complex. So if a unit has 384 unit factors, it is the same as it owning 3.84% of the common property. We don’t need more decimal places than two because it wouldn’t be more helpful in calculating condo fees or determining special resolution votes. There aren’t enough units in any condo to need to be more specific.
Hi Alan. There are condos in AB whose Boards appear to have arbitrarily increased unit factors in a building (a later phase) to be ‘more fair’ to units in previously constructed/other buildings on the Plan who have similar area/sq mtrs.
Should the Plan be amended by a Court, or can Boards make a decision to levy Special Assessments or assess contributions based on their decision to apply unit factors that are different from the Plan, by simply saying so?
Hi Sharon,
I believe all changes to unit factors would require a special resolution where 75% of all unit owners would have to agree to any of the changes. If this did not happen, I believe the adjustment to unit factors would not be legal. However, if the new units being built are changing the percentage ownership of the complex, there may be pre-existing arrangements for this particular shift in unit factors. Without knowing more, I wouldn’t know if this was arranged or is even possible. Regardless, the plan does need to be changed and so do all the titles. For example: if a land title says there are 112 unit factors for a unit, that is how many there are. You cannot ‘decide’ to change unit factors without amending the plan as a whole and the titles for all of the affected units. This is my understanding, but this question would be better answered by someone at land titles and with help from a lawyer.
My condo complex will consist of two buildings when complete, only the first building is occupied. The second building has not started construction. If the total complex will consist of 10,000 unit factors and 7,500 unit factors are needed to change condo bylaws, can the current board change the bylaws with only 5,067 of actual completed unit factors?
Hi Phil,
That is an excellent question. I believe 7500 unit factors would be needed no matter what. That is, if you are saying that you only have 5067 factors complete, that suggests that the developer still has control of 4933 unit factors. This would mean that the owners cannot pass a special resolution under any circumstances. You would have to wait until the rest of the unit factors are sold off to other buyers and then you could put together a special resolution proposal and put it to a vote.
On older condos is there anything saying that condo fees can be made up of expenses on unit factor and expenses on per unit. Why should I pay more to use an amenity building as one person than a smaller unit with two people? Also same applies to street maintenance, lawn care, and a few other items. Reserve fund I do not mind paying by unit factor.
Hi Patsy,
Condo fees can sometimes be charged differently than unit factor, but they almost never are. There may be more ‘fair’ ways of charging in an owner’s mind, but what you have to remember is that you own shares in a corporation. The condo is a corporation and it is similar to other corporations. If you own something, you are responsible for it. If you think about it like any other corporation, this makes more sense. If you owned shares in a company with your family, say, then you would be responsible for any costs associated with that company. If you owned 25% and your sister 25% and your two brothers had 25% each, then any costs would be borne by you all, and those costs would be divided according to your ownership percentage. When you buy a condo unit, you are not really buying the unit – you are buying a share in the corporation that gives you exclusive use over your unit (and maybe a balcony or terrace and parking stall). Therefore, you are paying based on that. I hope that makes sense. It’s not necessarily fair in the way you’re thinking, but legally it’s actually very fair. And most importantly, it’s the easiest way to calculate costs for owners. It isn’t the only way, but it’s how almost all condos do it.
Can or should unit factors be changed/updated to reflect the current appraised value of each unit?
If one owner does a complete, high grade remodel to their unit, while another owner still lives in a as-build unit, isn’t the first owner paying less than their fair share in condo fees?
NOTE: In our condominium the corporations insurance is required to cover the replacement cost of all of the units, including all improvements and betterments made to the units by the Owners and all of the Common Property.
Hello Wood,
Interesting question… No, unit factors can never be changed based on unit value. They are set when a building is constructed and that is because they are shares in the corporation. You cannot change your shares by adding value to your unit. Your unit value has nothing to do with how much of the corporation is owned or controlled by you. In many cases, what is ‘fair’ is debatable, but when you buy a condo, you are agreeing to own a certain percentage of that building or complex. That is a contract you agreed to – you cannot change the terms of the contract by making your unit better. If your insurance included improvements, that is unusual – but it still cannot affect unit factors. Think about it, you could buy out other condo owners by putting gold faucets in your unit. That wouldn’t be fair at all. You wouldn’t be paying your neighbours for the unit factors you took from them. You’d be getting a nicer unit, AND you’d be getting more shares of the building. And who would decide what your unit was worth? It simply couldn’t be done.
I think what you’re asking is can you make someone who has a fancier unit pay higher condo fees because of the insurance that is included. Honestly, the difference in improvements insurance from unit to unit must be miniscule, anyhow, but the answer is no. You cannot do that. But even if you could, adjusting unit factors is not how you would want to do it, because like I said before, you would all lose out on your unit’s value at the expense of charging someone more. The solution would be to change the way insurance is paid. That is, separate out improvement insurance from your building insurance. If this is in the bylaws, you just need to re-write them. Re-writing bylaws to fix an unfair policy is like using a scalpel. Changing unit factors to fix a minor insurance adjustment is like using a sledgehammer with a bomb attached to it.
Is there any way to check if the unit factors are correct? Other units in my building are more than twice as large as mine, but their unit factor (and corresponding monthly fees) are only 16% higher than mine. I have never seen a condominium plan and the building is more than 50 years old. Is there some way I can view the plan? Is there one registered with government somewhere?
Hi Tim,
Yes, you can check your plan any time at Alberta Land Titles. It only costs $2.00 and you can download the plan. It will have all the unit factors on there.
Hi Alan,
How do you correct and realign Unit Factors for all condo units? Currently our total unit factors do not sum up to 10,000, and almost all units do not get the appropriate unit factors based on sizes. Example, a smaller unit can have the same or higher unit factors than a larger sized unit. The board created a “dummy” unit to fill up the remainder of total unit factors to make the 10,000 requirement. When new budgets are introduced and fees are recalculated, the board does not use the Unit Factors because of their inconsistencies, but rather use the formula in the by-laws. Lately, the Unit Factors were used in passing over 20 special resolutions to change the wordings of the Bylaws. How legitimate was that? If a legal procedure is required to correct this problem, is it costly that it should be left as is and still usable? What are the implications if ignored? Thanks.
Hi Don,
I am sorry, but I do not completely know the answer to those questions. Creating a dummy unit is a fairly clever way to use up unit factors, but the dummy unit would be owned by the corporation, so it would have no value and therefore be useless. The condominium Property Regulation states that unit factors must add up to 10,000, so this should be corrected, I think. It seems that your plan would have to be redone if the plan does not add up to 10,000. I am not sure how old the building is, or how the unit factors were calculated, but it seems like it needs to be fixed. Because special resolutions are based on unit factors and there is an error in them, then I am not sure that the special resolutions would be enforceable. I would definitely talk to a lawyer about your condo’s situation. Also, remember that Bylaws need to be registered with Land Titles to be legal.
Hi Alan,
I am not sure if you’ll be able to help but I thought I might try anyways or maybe you might be able to steer me in the right direction. I’m just curious if the unit factor’s can be changed? I’m asking because my condo has a bit of a unique situation. The top 2 floors have under ground parking included with their units, we as the bottom 2 floors do not. Lately the overhead garage door has not been working properly, requiring a large maintenance fee, which is now split between everyone, even though half the building do not have access to the indoor parking. I do realize that fees are split between all owners; expect in this instance it doesn’t seem right that I am paying for something that I don’t even have access to.
Thank you for your time.
Hi Lindsay, Yes condo unit factors can be changed, but I can tell you it’s not likely going to happen and even if it did, it’s so expensive and complicated that it won’t likely be worth it. The overhead door, while costly on the face of it, is not likely to be that expensive per person. It’s annoying for sure to pay for something you don’t use, but that’s the nature of taxes and fees like this. You may not ever walk through the front door, opting to use the rear, but you still pay for it. Your neighbour’s window might leak, but you’ll have to help pay for it to be sealed back up. It’s likely that surface parking needs snow clearing that you might benefit from, that people with underground parking do not. That’s the nature of a condo. You’re in it together, for better or worse. Unit factors are based on how much of the corporation you own and that dictates the share you pay when you buy it, maintain it and when you sell it, too.
I had so many questions and all of them were answered (well pretty much) Unit factors are obviously widely used. Even though I don’t like them. The one answer you give is the bigger your condo the stronger your voting is. So how does that work when it also says one vote per condo? I am assuming all the units given to each condo after a vote the units must be added for the winner. I also cannot believe there is any voting benefit or anytime my vote or ownership would benefit me. I am firmly a believer that 380 condos which are 40% 2 bedrooms should be paying more for regularly common property. My question is can condos charge by different formulas as long as they change the bylaws? I also cannot see anyone getting any profits from selling a unit paying 180 a month more in fees for any new owner and expanding by the same amount every year. At this rate the fees for a 2 bedroom would double a one bedroom after 10 years. Selling power is gone.!
Hi George. You each vote once, and then that vote is multiplied by your unit factor. So your vote is worth a percentage of the whole. Unit factors are the same as a share in a company in that regard. Some people own more shares than others. This is not for votes that the board makes. Board votes are based on the number of board members and each board member has one vote. Your unit factor is for other kinds of votes that do not happen often. As for paying condo fees, a larger unit does pay more for common property. That is why they use the unit factor system. The more you own of a condo building, the more you pay for the upkeep. Yes, you can change how condo fees are charged by changing the bylaws, yes. As for selling condo units, a larger unit is typically worth more money than a smaller one. They might pay higher condo fees, but you get something for that extra cost – a bigger condo.