How Are Condo Fees Calculated
Condominiums are often attractive purchases for those who wish to own a property, but prefer upkeep that is easier than a house. However, that ease comes with the acceptance of condo fees. Before considering a condo, it is vital to consider what fees are actually going toward…and what they aren’t.
The first question to answer is the “who.” Condo fees, and the upkeep that comes from them, are managed by a homeowner’s association board. There people are elected from the community to manage the community. They put together budgets for repairs, insurance, and utilities of common areas. It’s best for community members to interact with the board and view the budgets they put together so that they know the details of what is going on with their money. Keep in mind that any community member can run for election onto the board if they are dissatisfied with the way it is currently run.
After the budget is put together, the expenses are divided among all those who own property in the community. The percentage is often calculated based on the total square footage owned. This means that those who own larger units will usually be paying more in assessments. While this is the baseline, sometimes other factors are taken into account in the percentage of payment. Such things as what floor the unit is on or the view available can affect the percentage. Square footage is the norm, but different states can have different formulas. For example, some use approximate relative value of the properties to divide the assessments.
Even the best laid plans go awry. Occasionally, emergencies will occur that require special assessments not originally included in the budget. These fees might be limited to a specific building experiencing the problem rather than the whole community. Other than that, the fees are split in much the same way the normal fees are. While special assessments are not always a sign of a poorly run HOA, it is important to look over the HOA budget and make certain that a portion of fees are being saved in an emergency fund so that such surprises prepared for and special assessments are infrequent.
It is important to understand where the responsibility of the HOA ends. The HOA is responsible for the exterior of units and for the upkeep and repair of common areas, but anything inside an owned unit is solely the purview of the owner. Roofing repair will be covered by condo fees, carpet replacement will not.
The maintenance of common areas the condo fees provide for are vital for protecting the property values of the community as well as improving the living experience of community members. Knowing this, such fees are necessary. If you are concerned about their usage, make certain to be engaged in the condo association so you know your money is being used wisely.