Taking the mystery out of condo fees

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Taking the mystery out of condo fees

Postby AffableManagement » Sun May 06, 2012 9:48 pm

Taking the mystery out of condo fees

Siobhain O'Reilly Jun 17, 2011 56 Comments
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Condo fees are often a major factor in making a decision to buy or not.

It could be that you live in a large city and don’t want to move to the ‘burbs in order to afford buying your own place. Or maybe you just can’t be bothered with all the upkeep that’s involved in owning a house. Either way, owning a condo can be a rewarding alternative – as long as you know what you’re doing.

If you’re buying a condo for the first time, it’s important to understand exactly what you’re getting into, especially when it comes to condo fees.

What are condo fees and what do they cover?

In addition to making monthly mortgage payments, each condo owner is required to make mandatory monthly payments to the condominium corporation in the form of condo fees. And no, these fees aren’t negotiable.

Your condo fees are set by the building owners and are based on what’s called “percentage of interest” – that is, how much interest or ownership you have in the building. This is determined by the square footage of your unit and how it compares in size to other units in the building. Your percentage of interest is then multiplied by the building’s annual operating budget and broken down into a monthly fee.

These fees (on average, a few hundred dollars per month in larger markets) cover various operating costs of the building. Though it varies from building to building, some of these costs may include:

- General building maintenance
- Condo employee salaries (cleaning staff, superintendant, recreational facility staff)
- Minor repairs
- Utilities like electricity, gas, water and sewage
- Cleaning – windows and common area carpets
- Garbage collection
- Landscaping and signage
- Snow removal
- Security
- Pool and/or gym maintenance
- Elevator maintenance and repairs
- Pest control
- Parking facility (including garage maintenance and monitoring)
- Heating, ventilation and air conditioning maintenance
- Management company and legal fees
- Insurance (this covers external aspects of the building only. You’ll have to buy your own insurance to cover contents)
- Reserve funds used to finance any major repairs and/or renovations

Other things you should know

You might also be required to pay a utility hook-up fee. And while you might think that certain amenities like the swimming pool or a gym would be optional, they’re not. Even if you never dip a toe into the pool, you’re still required to pay the fees that cover the costs to maintain it. You should also know that condo fees aren’t a set amount – they tend to rise each year, much like taxes.

Despite these extra (and sometimes confusing) fees, many people feel that condo living is the only way to go. If you’re thinking of going condo yourself, just make sure you do your research first and ensure you can cover the extra costs. As long as you don’t go into it blindly, owning a condo can be a great alternative to buying a house and all the work that goes with it.
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