Condo Fees - What You Need to Know

When buying a condominium -- whether new construction, building conversion or resale -- you may negotiate price or other features, but condominium fees are not negotiable by an individual. 

Make sure as you search for properties that you find out everything about the fees.  What do they pay for… are they comparable to other complexes in the area?  Will they fit in your budget?  Keep in mind that part of your condo fees may be tax deductible and consult an accountant to get the maximum benefit.

All condominium developments have condo fees – generally, the fees are assessed based on the unit's individual portion of the total – therefore larger units equal higher fees and smaller units equal smaller fees.  Condo fees cover the cost of items such as exterior and shared interior space maintenance, master insurance policies, parking lot maintenance, common utilities such as water, sewer and trash.  Some may even cover gas, electric, heat, A/C in individual units.  Elevator maintenance, management, other amenities such as pools, tennis courts, party rooms, fitness facilities, etc and more can be included.  The general rule of thumb is that older high-rises usually have higher fees that cover all utilities.  Fees at newer developments are often lower.

Deciding how the fees fit into your budget involves several issues:

• Do fees offset costs that you would already have to pay - such as gas, electric, fitness club membership, pool/tennis access, and parking?
• Are you being charged for services you won’t use?
• How will you feel knowing you don’t have to care for the roof, fence, basement, exterior, garage, etc?

Although its important to take a careful look at condos fees, its essential to keep in mind all of the benefits your condo association provides.  You need to decide what works for your situation.

With new construction or conversions, condominium fees are determined by the developer. After the development has been  partially sold to owners, a condominium association may form and may change the fees in accordance with the codo association bylaws.  This generally requires a vote of the board of directors of the association.

Sometimes a special assessment is needed in a condominium complex to pay for major repairs or replacing the driveway, the roof or heating systems, for example.

Determining the monthly condo fees is actually done on a very straightforward basis and is not arbitrary.  Actual costs are taken into account and responsibility divided equally based on unit size or value.

Many people are put off condominium buying due to monthly fees, but they don't realize that fees they are paying go to things they have to have anyway.  For example, exterior maintenance is included in the fee, as well as painting and maintenance of the trim and roof. Fees include utility payments for exterior lights, the maintenance of common areas, trash pickup, sewer, water, and insurance on the building, as well as taxes on the building.  While the amount of fees can be dramatically different from complex to complex, what the fees cover also varies.

Buyers researching which expenses the condominium fees cover should make sure the fees include escrow accounts to pay for major and unexpected repairs such as roof or elevators.  Developments with substantial accounts for long-term repairs are less likely to need special assessments.

Condo buyers should view this part of their condominium fees as forced savings accounts.  Condo fees can also be thought of as a group discount for things like insurance and water bills.  Fees may also encompass payments for shared amenities like swimming pools and tennis courts.  The more amenities a community has, the higher its condo fees will be.  Swimming pools, fitness clubs, libraries and clubhouses are expensive to maintain and generate additional utility costs.  However, when compared with the cost of such amenities in a private home, there is much more value in condominium ownership.