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Understanding Condo Ownership (and fees)
1/26/2014 9:10 PM
Condominiums are often advertised as maintenance free living. For those that are tired of mowing the lawn and shoveling the snow, purchasing a condominium may be exactly what you are looking for in a home. But to call it maintenance free living may be a misnomer, as the cost of living “maintenance free” is billed to you every month as part of your condo fees.
The responsibility for maintenance in a condo building and its units are divided between the condominium association and the owners. Of course, the exact dividing line between the association and the owner depends on the particular building and the rules set forth in the condo docs, but generally, the condo association is responsible for maintenance of the common areas and grounds, while the owner is responsible for their individual unit.
The cost of maintaining the common areas and building by the condo association is passed on to the condo owners through a monthly condo maintenance fee. Depending on the building, condo fees will cover the cost of the management service, the building’s staff, building security, cleaning, insurance for the building, utilities for common areas, trash removal, landscaping, pool and gym maintenance, and other facilities. In some instances, the condo fees also cover the utilities for the unit such as water, electric, and heat.
Part of the monthly fees from each unit are set aside in a reserve fund in case unexpected large expenses arise. Sometimes, large maintenance expenses (such as a new roof) are beyond the budget covered by the maintenance fee. These items often require special assessments, which are passed on to the condo unit owners and require payment above and beyond the normal monthly maintenance fee.
Hopefully, the higher the fees, the more services that are provided and included within the fee. So instead of thinking of condo living as maintenance free, it’s more accurate to think of a condo building as a number of real estate owners who have agreed to pay for maintenance and share the cost between them.
Condo fees are generally assessed to each unit on a per square foot of living space. But there is much more to consider when purchasing a unit then the monthly cost of the maintenance fees. The cost and frequency of special assessments, the size of the reserve fund, the frequency and size of fee increases, and the amenities covered by the fee should all be considered when purchasing a condo unit in a building.