If you've ever looked into buying a condo, you've noted that, in addition to your monthly mortgage payment and property taxes, you'll be required to pay monthly condo fees. So what do these fees cover?
Generally, they pay for the maintenance of any amenities outside your personal living space that you share with your neighbors -- like, say, the hallways, parking lot, and yard.
"Condo fees are your percentage share of the costs to run the building as a whole," explains Janice Pynn, president of Simerra Property Management.
This is good since odds are, you bought a condo to avoid all the maintenance and yardwork that come with owning a regular house. And in case you think your condo fees are too high, know this: No one pockets a cent of your checks or is getting rich off condo dues.
"They are not a profit source for building management; in fact, each building is registered as a nonprofit corporation," Pynn points out. In other words, these fees go solely toward enhancing the value of your real estate, which is a good thing!
The breakdown: Condo fees and costs
Condo fees typically range from $100 to $700 per month, varying greatly based on what they cover. At one extreme, Hollywood's hottest luxury condo building, Sierra Towers, offering an array of luxury amenities like 24-hour concierge service and valet parking, may charge residents up to $4,000 per month. (Suddenly that $250 fee you're being charged feels a bit more reasonable, doesn't it?)
Here are the services and amenities you can expect your condo fees to cover:
Interior maintenance: Condo owners share the cost of maintaining common building areas like parking structures, storage rooms, laundry rooms, game rooms, fitness centers, saunas, and hallways, as well as mechanical systems like heating, cooling, electric, gas, plumbing, and elevator maintenance. If a crew comes regularly to clean the common spaces, their fees are also included.
Exterior maintenance: Condo owners also share the cost of exterior common areas like fences, walls, gates, pools, landscaping, window cleaning, and seasonal expenses like snow removal, winterizing, and cleaning out rain gutters. If a gardening crew comes regularly to take care of the landscaping, their fees are also included.
Security: This could range from cameras at the entrance to full-time guards patrolling the grounds. If visitors have to be buzzed in to the building, this system will be covered by your condo fees.
Utilities: Most developments' condo fees cover utilities such as water, sewer, and trash. Some buildings even include heat, electricity, cable, and Wi-Fi. Remember that the more utilities covered, the higher your condo fees will probably be.
Insurance: Most condo fees include a homeowners insurance policy that covers exteriors and shared common areas. Depending on where the condos are located, the insurance policies might also cover flood and/or earthquake damage. The nice thing here is that condo owners need only to purchase insurance policies that cover the interior of their home and their possessions.
Reserve fund: There are expenses that don't come up on a monthly, or even an annual, basis that will need attending to, so a well-managed condo board will charge owners a certain amount per month that will go into a reserve fund. It would cover things like paving, reroofing, replacing water heaters, exterior painting, hallway and lobby flooring and redesign, and more.
What is an assessment?
In addition to your monthly condo fees, special assessments might arise. Every once in a while something big (e.g., a roof or an elevator) gives out, and there aren't enough reserve funds to cover it. In that case, the condo owners will have to pay an extra fee for these additional expenses, typically tacked on to the usual monthly condo fees in small amounts until the assessment is paid off.
At times like these, it's best to remember that, as with any type of homeownership, unforeseen expenses arise, and making the necessary repairs is in your best interest. In other words, you get out what you put in.
-- -- -- -- --
Watch: Buying a Condo? Here's What You Need to Know