Home Owner Associations, Condo Fees.............How Much and What do you get?

[Mikeg]

....condo fees or dues are to all intents and purposes a "tax" paid for the common "good".

I've been a member of our condo association's board of directors for the past five years. My take on how to describe condo ownership, the monthly fees and the occasional assessment is as follows.

Let's say you purchase a condo unit in a development that includes a total of 100 condo units. You become the owner of that condo, meaning you have undivided ownership of everything inside it, beginning with the paint film, the electrical outlets, the plumbing shut-off valves as they emerge from the walls, etc. However, you also become a co-owner with a 1/100th ownership interest in everything else that makes up the common elements in that condo development, including the stuff in the walls, the roof, the open area landscaping, the roads, streetlights, etc. [[caution - some condo developments may have classes of units that have have been assigned a differing "percent of value" so that the ownership interest, the monthly fee and the value of your vote may be different than those of your neighboring condo owner).

The monthly fee is to cover the current year annual costs for the operation and maintenance of the common elements, plus the amount that the board has budgeted to add to the replacement reserve account during the current year to go towards covering the anticipated costs of future projects such as painting the exterior trim in four years, a roof replacement in ten years, repaving the roads in twenty-five years, etc. A formal reserve study can be performed to estimate how much the board should be adding to the replacement reserve account in each of the coming years to enable the projects to be completed when needed without having to assess each unit owner.

If I were considering the purchase of a used condo, before I signed the purchase agreement at the very least I would want to see and know the following:
a) obtain a copy of the condo association's current annual budget, plus the most recent financial statement of income, expenses and reserves; the expense section of the budget will tell you what categories of services are provided by the condo association.
b) ask for the percent of value assigned to the unit you are considering to purchase and if it is the same percentage that has been assigned to all others in the condo development
c) ask if the board of directors employs the services of a professional property management company to manage the day-to-day operations of the association
d) ask for the amount of the current monthly fee, when was it last increased and whether an assessment has been announced or is in the process of being collected
e) ask for the number of units that are currently behind on the payment of their monthly fees and assessments and for the total amount of delinquencies owed to the association; also ask if the numbers are higher or lower than at the same time one year ago
f) ask if less than 10% of the total units in the development are leased and are thus occupied by a non-owner
g) ask when was the last time the board of directors had a formal reserve study made, what did it recommend and is the current amount in the replacement reserve account equal to what the study said it needs to be in order to cover future project expenses without requiring a separate assessment.