If you picture living in a planned community full of amenities and happy neighbors, you’re probably asking yourself:
How much is the condo association fee?
Compared to a HOA fee a Condominium Fee will always be higher. The reason is that a HOA fee is divided evenly among the owners, while the condominium association fee is calculated based on different factors like condo size and how much ownership over public areas a condo owner has.
Let’s dig deeper into this subject.
Understand the annual budget
To understand why an HOA may increase dues and assessments, you must first understand what an HOA is and how it sets the number of dues required.
An HOA is often a nonprofit company formed to manage development.
HOAs are typically managed by a board of directors composed of individual members (homeowners) elected by all members (owners).
When a homeowner purchases a house in a development, they immediately become a member of the HOA. (However, in a new development, the board of directors will likely consist of the developer and its representatives until a specific percentage of the property is sold.)
While the HOA fees, as mentioned above, are divided evenly among the owners, it is not as symmetrical regarding the condo association’s fees.
A condo association differs in the extent of ownership each condominium owner has within the entire community. Based on the extent of ownership each tennant has within the community the association will bill that condo owner differently.
One thing both the HOA and the Community association have in common, the property management company is just another vendor. Whether the community has a property manager or not, the board has the ultimate fiduciary duty to prepare a budget.
As a courtesy of service, property managers will often prepare the annual budget prepared for the board. Board members must review it carefully and make sure it is realistic and accurate.
What do condominium fees cover?
A condominium or community association charges fees in order to maintain the shared units of the community.
In other words, for the upkeep.
Below is a list of some of the most typical facilities and services maintained by community association fees.
- Parks for the community
- Fitness facilities
- Centers for entertainment
- Trash collection
- Electricity and other utilities that serve public locations
- Security guards and gates
- Fire detection and suppression systems
- Pest control in public areas
- Trash collection
So, the more bells and whistles your community has, the more your community association fees will cost.
A $100 monthly fee was required for a 1,000-square-foot condo in Des Moines that did not have a communal pool or gym. It included services such as utilities, gardening, and snow removal.
Meanwhile, a $4,000 monthly rent was levied for a 3,400-square-foot Sierra Towers apartment in Hollywood with several amenities, including 24-hour concierge service.
As a result, it’s critical to consider amenities the community has to offer in terms of comfort and entertainment. You generally pay for what you get, have and upkeep.
What to Look for in community (aka condominium) association fees
Regarding the actual cost of your community association fees, amenities and maintenance requirements are simply parts of the jigsaw.
The size of your condo plays into the equation. The larger your condo, the higher your condo or community association costs will be. It’s normal that a planned community may consist of single-family homes, condominiums, and townhouses.
Furthermore, a study discovered that community association costs are higher on average in neighborhoods with older structures. It makes sense because more aged facilities will likely mean more maintenance.
How all of this factors into the annual budget
Depending on the budget needed for maintenance and upkeep one year, the annual budget for the next year may be raised to meet the rising costs for maintenance and upkeep. Since the community association will preferably not deplete the reserves it will raise the budget to compensate for any increase in maintenance costs.
This will result in owners having to pay higher community association dues.
How much HOA Fee is too much?
It is best to compare the association fees to other communities in the region you live or consider moving to.
And even then, as you now know, the factors that make up the amount of the community association fee is based on many factors that can’t be measured by holding them against a template.
However, if you notice that the rate of fees that a community association is charging unreasonably exceeds the level needed to buffer reserves for unforeseeable circumstances, you can always make a legal inquiry and assign an independent expert to review the situation and whether the fee hike is justified.