What Should Condo Boards Inspect Before the First Freeze?

A draft budget lands in the board package showing a manageable increase over 2026. Nothing looks shocking, the monthly common expenses still seem reasonable, and there may be pressure to approve it before the next fee notice has to go out. But a budget can look balanced on paper while quietly carrying forward last year’s bad assumptions. For an Ontario condominium corporation, approving the 2027 budget should involve much more than asking how much each line increased.

The CAO Guide on Condo Finances recommends using realistic estimates for income and expenses and comparing financial results against the budget throughout the year. CAO specifically cautions that setting expenditures unrealistically low to minimize common expenses can lead to a deficit. That matters because Ontario directors also have a statutory duty to act honestly, in good faith, and with the care, diligence and skill of a reasonably prudent person under section 37 of the Condominium Act, 1998.

Start With What 2026 Actually Cost

One of the most useful documents during budget season is not last year’s approved budget. It is the current year-to-date financial statement, together with a realistic projection to year-end. A line that was budgeted at $40,000 but is heading toward $52,000 should not automatically return to $40,000 for 2027 simply because that was the original number.

Boards should look for recurring variances. Were plumbing repairs consistently over budget? Did security overtime keep appearing? Were utilities higher because rates changed, consumption increased or equipment was performing poorly? CAO notes that a statement of operations typically compares actual revenue and expenses against budgeted amounts and recommends investigating significant discrepancies rather than allowing them to roll forward unnoticed. 

This is also where the treasurer can help move the conversation away from percentages. A 4 per cent increase means little if the starting number was already unrealistic.

Condo Snow Removal Ontario Contracts Deserve a Closer Look

Vendor contracts can create some of the largest surprises because the annual figure often hides how the service is actually billed. For a condo snow removal Ontario budget, for example, the board should know whether the contractor is charging a fixed seasonal price, per visit, per centimetre, or through a combination of base fees and additional services. Salt, ice management, snow hauling, extra call-outs, fuel surcharges and work outside normal service parameters can materially change the final cost.

The same review belongs across landscaping, cleaning, security, elevators, mechanical maintenance and management contracts. Look for automatic renewal dates, contractual increases, changes in scope and services that were repeatedly purchased outside the agreement during 2026. If a contract says 3 per cent but the corporation routinely spends another $8,000 on extras, budgeting only the contractual amount understates the real cost.

The question is not simply, “What did the vendor quote for 2027?” It is, “What did this service actually cost us to deliver last year, and has anything changed?”

Insurance, Utilities and Staffing Need Their Own Assumptions

Applying one inflation percentage across the entire budget may be convenient, but condominium expenses do not all move the same way. Insurance should be reviewed using the latest broker information, not just last year’s premium plus a general inflation factor. Ontario condominium corporations are legally required to maintain specified property and liability insurance, so an unrealistically low insurance allowance does not make the obligation disappear. CAO’s condominium insurance guidance explains the corporation’s insurance responsibilities.

Utilities deserve similar attention. Compare consumption as well as dollars. If water spending rose sharply, the cause could be pricing, increased usage, a leak or another building issue. Staffing projections should include known wage changes, benefits, relief coverage and overtime patterns. Management fee increases and additional administrative services should also be checked against the actual agreement.

A stronger budget uses a reason for each significant assumption instead of applying the same percentage everywhere.

Do Not Treat the Reserve Contribution as a Plug Number

When operating expenses rise, there can be temptation to soften the common expense increase by reducing the reserve fund contribution. That decision needs much more scrutiny.

Ontario condominium corporations are required to maintain reserve funds for major repairs and replacements. The CAO Reserve Fund Guide explains that boards must review reserve fund studies and establish future funding plans, while Ontario Regulation 48/01 requires reserve fund studies to include a long-term financial analysis using projected contributions, inflation-adjusted expenditures and assumed interest rates.

Before approving the 2027 contribution, compare it with the current funding plan and ask what has happened since the study was prepared. Have projects cost more than expected? Was a major repair brought forward? Has something been deferred? If circumstances have materially changed, input from the reserve fund study provider, auditor or condominium lawyer may be appropriate before the board changes course.

A Budget Should Explain the Year Ahead

The final review should connect the numbers to what management and the board already know is coming. A lobby renovation, major plumbing investigation, new staffing arrangement, insurance renewal or winter maintenance change should not appear as a surprise halfway through 2027 if it was already foreseeable during budget season.

Budget approval is ultimately a governance decision, not an exercise in keeping the percentage increase as low as possible. A well-prepared 2027 budget gives the board a financial plan it can realistically operate within, gives owners a more accurate picture of what their corporation costs to run, and reduces the chances that recurring shortfalls will be explained away as unexpected expenses months later.

The most useful question before approving the final numbers may be simple: If 2027 operates the way the board already expects it to, does this budget still work?

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