You pay fees to your condo or co-op association every month, but do you know how those fees are assessed or what they pay for?
Monthly fees are calculated in one of two ways, depending on how your building is operated. Condo fees may be determined by taking a percentage for each condo and applying that to the overall operating costs of the building. For example, 10 units in a building may each expect to pay 10% of the operating costs. Alternatively, factors such as the size of a unit may determine that percentage. These operating costs cover items such as heat, hot water, electricity and staff for common areas.
On the other hand, fees may also be assessed by co-op shares. In this scenario, each unit in a building is allocated a certain number of shares. Where one unit might have five shares, an equal size unit may have ten based on its location and view. Operating costs are then divided by shares, with each share equaling the same amount. However, the unit with ten shares will pay more than a unit with five.
In addition to the fees mentioned above, fees or shares also go towards common expenses such as trash removal, pest control, and the building’s master insurance policy. If your building offers amenities like a clubhouse, gym or pool, your fees cover the upkeep and maintenance of these spaces as well.
Finally, your condo association or co-op typically plans for long-term repairs and a portion of collected fees may go to a reserve fund for future improvements and emergencies.