Real Estate Council of Alberta Fundamentals Practice Exam

How is the monthly contribution of a condominium owner calculated?

1. Annual expenses divided by 12

2. Annual expenses divided by 10,000

3. Annual expenses multiplied by unit factor

4. Annual expenses subtracted by reserve fund

The correct answer is: Annual expenses divided by 10,000

The calculation of a condominium owner's monthly contribution is typically based on the overall annual expenses of the condominium corporation, factoring in the size or unit factor of each individual unit. This means that the contributions of owners are proportional to the expenses incurred, which may include maintenance, management, utilities, and other operational costs. Option B, which suggests dividing annual expenses by 10,000, lacks context and does not accurately reflect how contributions are determined based on the specific characteristics of the condominium or the ownership's share. This option might confuse due to the arbitrary number without an explanation of its relevance. On the other hand, the correct calculation involves considering the annual expenses directly related to the condominium, potentially modified by a unit factor. This ensures that each owner contributes a fair share proportional to the size or value of their unit compared to the total of all units. Therefore, this proportional representation accurately reflects how costs are distributed among owners. In summary, the monthly contribution is typically calculated considering annual expenses adjusted according to the unit factor, ensuring fairness and transparency in how costs are shared among the condominium owners.