Condominiums are becoming increasingly popular in the United States, with many choosing to live in condos due to their affordability and convenience. But, with condo living comes condo fees.
What Are Condo Fees?
If you have ever lived in a condominium, then you know there are common areas that all owners share. These common areas, though, do not just maintain themselves. All owners are responsible for keeping these common areas in good condition. This is where condominium fees come in.
Condo fees, also known as condo maintenance fees, are fees that condo owners pay to the condo association (COA). The association then uses these fees to pay for various maintenance and repair costs. Condo owners pay these fees on a regular basis. Depending on the association, it could be on a monthly, quarterly, semi-annual, or annual basis.
Given the number of condominiums nowadays, it is essential to weigh your options first before coming to a decision. That means comparing the cost of condo dues as well as what these fees cover. After all, not all condo associations charge the same fees for the same things. For instance, a COA’s fees might cover the cost of common area maintenance but not trash removal services.
Are condo fees and HOA fees the same? In a lot of ways, condo fees and HOA fees are the same. But, the difference is that condominium fees related to condo associations, while homeowners association fees relate to — surprise, surprise — homeowners associations. The former exists to cover the maintenance and repair of common areas, which all condo owners have joint ownership of. On the other hand, in a homeowners association, the common areas are owned by the HOA.
Additionally, you may wonder, “Do all condos have HOA fees?” Almost all condominiums charge fees to owners for the maintenance and upkeep of common areas.
What Is Included in a Condo Fee?
Before choosing a condominium to live in, you must first understand how condominium fees work and what they cover. Again, not all condo maintenance fees cover the same things.
So, what do condo HOA fees cover? Typically, a condominium maintenance fee covers the maintenance of amenities and common areas. This includes landscaping, lobbies, sidewalks, patios, tennis courts, gyms, and elevators. They might also cover utilities, wages, management fees, and emergencies.
Apart from the operating fund, which the association uses to pay for day-to-day expenses, condo associations should also have a reserve fund. The association taps into this fund to cover the cost of large repairs or replacements as well as contingencies. Every association must keep its reserves properly funded.
How Are Condo Association Fees Calculated?
Every condo association has a set of members, called the board of directors, who manage the association. Along with overseeing the maintenance of the community, the board also carries the task of preparing the budget for the upcoming year. From this, the board can calculate how much to charge each condo owner in fees.
To prepare the budget, the condo board must consider all of the association’s basic expenses. They anticipate how much the COA expects to pay for things like trash collection, snow removal, landscaping, and other maintenance work. They also take into account things like insurance, utilities, housekeeping, property taxes, legal fees, wages, office expenses, etc.
Once the board has a projected cost of expenses in mind, they will then divide this by the total number of condo owners in the association. This includes the board members themselves as they are not exempt from paying condo dues.
Condo Fees on Average
How much are condo fees? Condominium fees can vary from association to association. If your condominium has a lot of amenities, your fees tend to reflect that. After all, swimming pools, tennis courts, gyms, and outdoor areas cannot stay in good condition without proper care.
Similarly, larger amenities also usually command a higher condo fee given the extent of maintenance required. The location and exclusivity of your condominium can also play a part in influencing the cost of your condo fee. If you live in an upscale neighborhood, then expect to pay a higher condo fee. Some associations even calculate fees based on how large your unit is.
Condo maintenance fees can vary wildly from $50 to $1,000. Again, there are a lot of factors that can affect the cost. Average condo fees, though, sit somewhere in the $300 to $400 range.
Can the Board Increase Condo Fees?
The short answer is yes. Condo boards do hold the power to raise condo maintenance fees, provided the association’s governing documents say so. Some states have laws regulating the increase in fees, though. For example, according to Civil Code Section 5605 in California, a condo board may not raise the fee by more than 20 percent of the amount levied the previous fiscal year.
Additionally, your association’s CC&Rs might have certain restrictions about a fee increase. It is worth noting, though, that should your CC&Rs conflict with state laws, the latter takes precedence.
Why Are Condo Fees So Expensive?
The location, exclusivity, and amount or extent of amenities in your condo can affect the cost of your fees. If you feel like your fees are too high, though, the condo board should take a look at some of the ways it can reduce the association’s expenses.
Investing in energy-efficient solutions, for instance, can have a long-lasting impact on a condominium’s budget. Additionally, condo associations should not be afraid to ask for special promos or discounts from vendors. It is also worth digitizing COA processes with the help of management software.
What Happens When You Don’t Pay Condo Fees?
If your daily living expenses are already too high for you to handle, you may feel tempted to skip paying your condominium fees altogether. That is a bad idea, though.
These fees are mandatory, which means there is no way you can get out of paying them. Once you agree to live in a condo managed by an association, you agree to its many stipulations as well. That includes paying condo dues.
Condo owners who default on their payments can face a number of potential consequences. Depending on what state laws and a COA’s governing documents permit, a condo board can impose one or all of the following:
- Charge a Late Fee. Failure to pay your dues on time can result in a late fee.
- Restrict Owner Privileges. The condo board can suspend your privileges and restrict your access to condo amenities if you stop paying your fees.
- Take Legal Action. Refusing to pay your fees can lead to the board filing a lawsuit against you. In more extreme cases, the condo board may file a lien on your unit and initiate a foreclosure.
Given the severity of some of these outcomes, it is best to simply pay your dues on time. If you are experiencing financial troubles, talk to your board about setting up a payment plan.
Take Everything Into Consideration
While it is true that condo living poses many benefits, it also comes with responsibilities. Whether or not you intend to use a condo’s amenities, you still need to pay condo fees regularly. As such, before you dive straight into a decision, you must examine all the pros and cons first. Condo living is not for everyone, but it is certainly a lifestyle worth considering.
Managing a condo association can come as a challenge, especially if you have little to no experience. Condo Manager streamlines and automates most of the management processes, making it easier for any condo board or management company. Call us today at (800) 626-1267 or contact us online for a free demo.
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