Buying an industrial bay condominium

An industrial bay condominium is a bay that is separately titled and can be bought. It is a common ownership route for a small business that wants to control its premises, and it carries a set of obligations that leasing does not.

What you actually own

You own a unit, defined by the condominium plan, plus a share of the common property. What falls inside the unit boundary and what is common property is set by the plan and the bylaws — and it is not always where you would expect. The overhead door, the windows, the exterior wall finish and the roof are frequently common property even though only you use them.

This matters, because it decides who pays when something fails and who may alter what.

Condominium fees

The condominium corporation levies a monthly contribution covering the common expenses — exterior maintenance, roof, parking, snow removal, common insurance, management and a contribution to the reserve fund. It is the ownership equivalent of additional rent, and it is not optional.

The reserve fund pays for major replacements. Alberta requires condominium corporations to have a reserve fund study and to fund the reserve. An underfunded reserve in a building with an ageing roof means a special assessment later, and it is the buyer's job to spot that before closing.

Documents to read before you commit

• The condominium plan — the unit boundaries and what is common property.
• The bylaws — what you may do in the unit, what you may store outside, signage rules, parking allocation, alteration approvals, and any use restrictions.
• The reserve fund study and the current reserve balance — the single best indicator of a future special assessment.
• Recent financial statements and the current budget.
• Board minutes and any AGM minutes — where you find out about disputes, deficiencies and planned work.
• The estoppel certificate — the corporation's statement of the unit's standing, arrears and known claims.
• Insurance certificate — what the corporation insures and, crucially, what you must insure yourself, including the deductible you may be liable for.

Financing

Commercial mortgage financing for an owner-occupied industrial bay is a normal product, and terms depend on the covenant, the down payment and the property. Where a business occupies the unit it owns, some borrowers use an SBA-style federal small business loan programme for the real property component. Speak to a commercial lender or broker early, because the financing structure often affects how the purchase should be documented.

This site does not give financial advice and publishes no rates. Get advice from a lender, an accountant and a lawyer before committing.

Owning versus leasing

Due diligence beyond the documents

• Get a building condition assessment, or at minimum a competent inspection of the roof, the mechanical equipment and the slab.
• Confirm the use is permitted under the land use bylaw and the condominium bylaws — both have to allow it.
• Confirm the electrical service, the heating and any exhaust equipment suit your operation.
• Ask about outstanding deficiencies, litigation and any planned special assessment.
• Check the parking allocation in the plan, not just what the current owner uses.