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Condo Maintenance Fees:

Question: I am browsing thru your website which I find very informative but I have one remark...As I am looking to a condo to purchase, I can't help but be discouraged by the high monthly maintenance fees.

In some cases, they are as much as $850 per month! for a $225K unit!  What
exactly do these fees cover and how much of the fee is profit for the condo
association?  How much can fees go up annually? Is there a legal cap on
annual increases?  Outside of Maintenance Fees, is an owner obligated to pay
additional fees and costs (to repair building for example)?

Answer: Maintenance fees vary widely from one condominium to another depending on a variety of factors. Within a building, they are usually (although not in every case) apportioned based on the percentage ownership of the project that the specific unit represents.

In the broadest sense the maintenance fees are determined by taking the total operating budget of the condominium, adding in a factor to fund any reserves that the Association's directors and Owners believe they should be funding and dividing that amount by the ownership interest in the common elements of each unit. That annual sum is then usually collected in monthly payments although some projects bill in quarterly or annual payments to minimize accounting effort.

If all buildings costs of operation were identical, you could assume that any condo of roughly the same square footage would have roughly the same maintenance figure. This is clearly untrue for several reasons.

First and most importantly is the overall style of the operation. A large project with doorman, plenty of security guards on duty around the clock, air-conditioned indoor corridors and public areas, fancy carpets in the corridors, pool, spa, gym and other costly amenities to maintain will normally be at the high end of the range, especially if the Association makes substantial provision for collecting and retaining reserves for replacement of major items.

A small (under 100 unit, say) project, with exterior "catwalk" access to the units, an electronic security system instead of live doormen and guards, no pool or waterfront will fall at the low end of the range: it's cheaper to run this sort of building.

No part of the fee is "profit" for the Association. Condo Associations are non-profit corporations set up to administer the building on behalf of the owners. The directors are almost always unpaid volunteer unit-owners. Larger projects will have a paid staff usually consisting of a licensed Community Association Manager and staff. The financial activities of condos are strictly regulated by Florida Law.

Just like owning a single-family house, there is no cap on how much it can cost you to maintain your property! Things break, things go wrong etc., costs of water, sewer, electric etc., are all beyond the direct control of the Association. What it costs is what it costs.

Outside of normal maintenance fees, a unit owner can be exposed to "Special Assessments" for large maintenance items for which adequate reserves do not exist as well as for updating and improving the property ("capital improvements").

Although one's first reaction to this would be: then a well-run building would have big reserves, in practice this is not usually the best avenue for a Condo Board to follow. Condo Boards, like the Congress, have a way of spending the "surplus" no matter how well-intentioned they are. Also, future buyers of the condo tend to disregard both the potential for future "Special Assessments" as well as the value of any reserves on hand when they review a condo for purchase. In fact, the higher the monthly maintenance figure, the harder it is to sell a condo even though that "high" maintenance could really just mean careful and conscientious management.

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Unless otherwise stated square footage and lot dimensions appearing herein are derived from county records and may or may not be accurate.
If square footage is material to a transaction a survey or other measurement is recommended. This information deemed reliable but not guaranteed. Current or previous year’s taxes may not accurately forecast future property taxes. Property taxes can increase from one year to the next for various reasons.

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800 West Avenue, Miami Beach, FL 33139 USA
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