Understanding Condo Fees: What They Cover and How They’re Calculated
Condo fees are an important consideration for any condominium buyer. They represent a recurring financial obligation tied not to just ownership, but to shared living. In this guide, we break down what condo fees are, what they typically include, how they’re determined, and which variables impact their monthly cost—helping you make a well-informed decision. Looking for a loan tailored to condominium ownership? We can help. Reach out to one of our mortgage experts today.
What are Condo Fees?
Condo fees are mandatory payments made by unit owners in a condominium. They typically include (but may not be limited to) monthly Homeowners Association (HOA) fees, move-in and move-out costs and sometimes include special assessments. These fees fund the operation, maintenance, and long-term sustainability of shared spaces and building-wide services.
Unlike standalone homeownership, condo living means shared responsibility for common infrastructure. These fees enable that model by pooling resources from all owners to manage and maintain the community.
What Do Condo Fees Cover?
These inclusions may vary, but many condo fee structures generally cover the following categories:
- Common Area Maintenance: Routine upkeep of shared spaces such as stairwells, elevators, hallways, pools, fitness centers and other amenities
- Exterior Building Maintenance: Roof repairs, siding and façade upkeep, windows and balcony maintenance
- Landscaping and Groundskeeping: Creates curb appeal with lawn mowing, tree trimming, snow removal and irrigation
- Shared Utilities: Water and sewer, gas, electricity for common areas, trash and recycling services
- Master Insurance Policy: Covers shared structural damage, liability and some exterior risks including fire or storm damage. Not to be confused with personal condo insurance, which owners must carry separately.
- Reserve Fund Contributions: Funds major repairs such as roof replacements, elevator refurbishment and HVAC system upgrades. Reserve funds are meant to help prevent large special assessment fees on condo owners.
How Are Individual Condo Fees Usually Calculated?
When calculating individual condo fees for unit owners, a condo association would typically start by taking a look at their annual budget. This generally includes:
- Daily operating costs including utilities, cleaning and staff salaries
- Service contracts such as landscaping and security
- Maintenance and repairs
- Insurance premiums
- Reserve fund allocation
Once the total annual cost is determined, fees are divided among unit owners, often based on unit entitlement—a percentage of the total that may be determined by:
- Square footage of the unit
- Floor level or view
- Number of bedrooms or bathrooms
Fees are reassessed annually to reflect inflation, market costs and planned capital improvements. Additional charges, known as special assessments, may be imposed for one-time, large-scale repairs not covered by the reserve fund.
Factors That May Influence Condo Fee Costs:
Your monthly condo fees may range from $50 to upwards of $1,000, depending on several factors:1
- Geographic Region: Urban centers and high cost-of-living areas experience elevated service, labor and insurance costs, which drive up fees.
- Unit Size: Larger units or those in premium locations (ex: top floor, corner units) tend to pay more due to higher entitlements.
- Amenities: More amenities mean more maintenance. Pools, gyms, spas, rooftop terraces, and valet services all demand corresponding budgets.
- Building Age and Condition: Older buildings may have increasing maintenance needs.
- Reserve Fund Health: Underfunded reserve accounts can lead to unexpected special assessments.
- Local Regulations and Insurance: Jurisdictions with strict building codes or disaster preparedness requirements may need more comprehensive (and costly) insurance and maintenance practices.
Leaning Toward Condo Living?
Before you commit to a condo, be sure to ask about:
- Upcoming special assessments
- Reserve fund balance
- Historical increases in condo fees
- Ongoing HOA disputes and litigation
All of these factors could affect the suitability of the condominium, so it may be prudent to ask your real estate agent for assistance getting this information.
Need a mortgage? We offer a variety of condo products. If you’re looking for something to fit your lifestyle, we’d be glad to walk you through your options.
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