Archived

This topic is now archived and is closed to further replies.

PBJ

Condo Associations

11 posts in this topic

Ok, so since i'm looking at condo's and there have been discussions about association fees and what not, I was wonder how they work? They're setup as a non profit right?

I know they money goes for paying common utilities, common spaces, building upkeep and so on. But does it REALLY cost that much to run and maintain a building? For instance say a building with (50) 1000 sqft units (for easy math reasons):

$.25 sq ft * 1000 sq ft = $250/month

$250/month * 12 months = $3000/year

$3000/yr unit * 50 units = $150,000 to the association per year.

What about larger projects like Boardwalk where that number is around 230 units (of yes varying sizes) where the number is much higher? What happens when the end of the year comes around and the association has money left over, do they save it in case of emergency? Maybe someone can shed some more light on the subject.

Share this post


Link to post
Share on other sites


Having worked for the Redstone Group (condo builder), I have a little insight into this. Some of that money pays the property management company, some of that goes to routine maintenance and other expenses like insurance, and some of that is saved long term for major projects like repaving the road (in the case of a gated community style development). I'm not sure how taxes work with condo developments, but I think it may include that as well. I'm sure all these things are covered in your purchase agreement or association rules.

-nb

Share this post


Link to post
Share on other sites

Having worked for the Redstone Group (condo builder), I have a little insight into this. Some of that money pays the property management company, some of that goes to routine maintenance and other expenses like insurance, and some of that is saved long term for major projects like repaving the road (in the case of a gated community style development). I'm not sure how taxes work with condo developments, but I think it may include that as well. I'm sure all these things are covered in your purchase agreement or association rules.

-nb

There usually isn't a breakdown in most condo bylaws, since it fluctuates with different vendors and services, and the bylaws would have to be re-recorded every time.

Your developer should be able to provide you with a breakdown of association costs of previous projects they've done. I know from experience a "common pool" is very expensive due to the amount of chemicals needed.

Share this post


Link to post
Share on other sites

I know that in my association it's up to the board of directors as to what is done with any extra funds. I think we have always elected to put the money into an account for when major repair or rehab work is necessary. (we do use a teeny bit for the annual summer picnic).

Share this post


Link to post
Share on other sites

Ok, here we go....being on a BOD of one of the major dowtown condo buildings for several years I have probably learned more than I ever want to know.

As for assesments there are basically two types, regular dues and special assesments.

Regular dues are assesed to cover the operating expenses of the property. These can include the physical maintenance of the building's exterior, grounds, common areas, etc; utilities for common areas; amenities such as a pool, doorman, excercise facilities; elevators; security; insurance.

Usually a manager is hired so there is a fee there. Often water and sewer and trash are included, sometimes cable TV.

Insurance is usually provided by the association on the building structures, you just need a more limited HO-5 policy covering the contents and sometimes some fixtures. You still of course need to cover your own liability as well.

Each condo association also needs to have a capital repair/replacement fund. This is to fund projects beyond normal maintenance (e.g. roofs, driveways, common area carpeting/furniture). By law the asspcoatopm is required to keep 10% of the operating budget on a non-cumulative basis in this fund. Usually this is not enough to do the capital repair/replacement that is required. An association can then either build this fund through dues to cover the costs when they occur, or keep it at the minimum and require co-owners to chip in through a special assesment when the need arises.

At the end of the year any surplus or deficit just rolls over.

It is important to note that when you buy into a condo association, you buy into a share of the assets and liabilities of the association. If the association has a lot of $ in reserve to repair/replace as necessary when you buy the condo, you get the benefit of this. If the association has a bunch of debts and the minimum in reserve, you will likely feel the effects of this in the coming years.

It should also be noted that when buying a condo from the developer, be careful of what the dues are. It is very common for the developer to kick-in a share of the expenses, either directly or indirectly, keeping down the dues for new purchasers. When all the units are sold and the developer stops kicking in and the co-owners have to take the full cost, dues often rise.

Well that should be quite a bit to get you started, if you have any more specific questions, feel free to ask.

Share this post


Link to post
Share on other sites

Being a condo owner I can say that dues are a neccessary evil . . . . I went through the last year's reconcilaition with a fine tooth comb and found some interesting discrepancies but no one seemed to give a rip including the condo owner sitting on the association . . . .

When I moved in I had to pay 2 months of dues "into the pot" . . . they have a reserve they are trying to build up and the new owners get to help pay for that . . fun, huh?

On the other hand, I don't have to mow the grass, worry about my trash pick-up, or shovel snow. The dues also cover insurance on the outside of the building.

No one is "getting rich" off the dues but you still wonder . . . . too bad they are not tax deductible.

Share this post


Link to post
Share on other sites

I know from experience a "common pool" is very expensive due to the amount of chemicals needed.

You could save some money with this.........

poolsigndontpee7sr.jpg

Share this post


Link to post
Share on other sites


Association dues are one thing in large condo communities like Plaza Towers, but what happens when a smallish apartment building is made over into condos? Such as the one on Union just south of Fulton...when there are so few owners in a building, the "pot" is much smaller...where does the extra money for projects come from, in that case?

Share this post


Link to post
Share on other sites

Association dues are one thing in large condo communities like Plaza Towers, but what happens when a smallish apartment building is made over into condos? Such as the one on Union just south of Fulton...when there are so few owners in a building, the "pot" is much smaller...where does the extra money for projects come from, in that case?

In Hillmount for example, the developer is the association until a particular amount of the units are sold. As a particular set numbers of units are closed on, the developers stake becomes less and less as the board is formed. Until that point, the developer is basically responsible for the percentage coverage of the unsold units.

There are also some features that may not be available until particular dates in hopes that there are enough units sold to cover the cost and maintenance of that item. However, the developer has funds available to him to cover any of the costs of repairs, and often looks at any potential long term projects such as roofs, systems, and potential repairs before the association dues price is set.

Share this post


Link to post
Share on other sites

Just be very, very careful, and ask up front what projects the developer has in mind for the future. You don't want to end up in the same situation I did (i.e., developer promising an amenity as part of the collective purchase price, then backing out -- nothing in writing -- and the Association members each getting assessed a nice chunk). I am very displeased with my Condo Association Board.

Share this post


Link to post
Share on other sites

  • Recently Browsing   0 members

    No registered users viewing this page.