What Are Condo Fees & How Do They Work?

Condominiums have become increasingly popular, and homebuyers are opting for them for numerous reasons. These include security, access to amenities, and the convenience of maintenance being taken care of by someone else.

If you’re looking for a condo, you’ve probably come across the term, ‘condo fees’, either from your real estate agent or through your research. You might be wondering, what are condo fees and how do they work?

Before you leap into condo ownership, it’s wise to understand what these fees are. You must also consider if they’re something you can afford long-term. Remember, while high fees can be a turn-off, they might also indicate that the building is well-maintained. 

This article covers what condo fees are, what they cover, their average costs, and how to calculate them.

What Are Condo Fees?

Condo fees, commonly referred to as HOA fees or co-ownership fees, are the monthly dues paid in a condominium complex to keep everything running smoothly. They represent your share of the costs to maintain common areas and services you use daily. These include window cleaning, snow removal, and lawn care.

They also cover essential utilities—including heat, water, sewer—and even the regular trash collection. Plus, if your building boasts amenities like a gym, pool, or party room, your fees help keep those luxuries in tip-top shape.

What Do Condo Fees Cover?

Before purchasing your condo unit, it’s important to understand exactly what your fees cover. Here are some of the most common things that your condo fees might cover:

Common Area Maintenance

Your condo fees cover the maintenance of common areas in your building. This includes features like hallways, elevators, lobbies, and shared outdoor spaces. It’s important to have these areas well-maintained for safety reasons and to keep up the overall appearance of the building.

Exterior Maintenance

Maintaining a condo’s curb appeal is as important as maintaining the interior. Some of your condo fees go towards keeping the exterior of your building or complex in good condition. This can include repairing or repainting the exterior walls and fixing roofs.

Groundskeeping

Groundskeeping fees cover several essential tasks including landscaping, snow removal, and lawn maintenance. These services help keep the exterior of your building looking its best and create a pleasant living environment for residents.

Utilities

Your condo fees also cover essential utilities such as heat, water, sewer, and trash collection. These services are necessary for daily living in your unit as they make it comfortable and convenient.

Utility fees are a major benefit for your condo as you don’t have to worry about setting up and paying for these services separately. Keep in mind that the type of utilities covered may vary depending on the location and size of your condo unit.

Amenities

As mentioned before, your fees also go towards amenities provided by the building. These include gyms, lobbies, pools, party rooms, and other shared spaces. These amenities are often a major selling point for condo units and require regular maintenance to ensure they remain functional and safe for use.

Insurance

In addition to the above-mentioned areas, condo fees also go towards a reserve fund. A reserve fund is a savings account that covers unexpected or major repairs to the building or complex. In simpler terms, it is a master insurance policy.

How Are Condo Fees Calculated?

The method for calculating condo fees can vary from one condominium association to another. Generally, your condo association or strata council will first estimate the total annual operating costs for the condominium.

This includes expenses for daily operations such as landscaping, snow removal, cleaning services, utilities for common areas (like lighting in hallways and water for landscaping), security, and the salaries of any onsite staff.

It also covers maintenance and repairs of communal facilities like elevators, swimming pools, gyms, and parking areas. Aside from the budget, the council will also consider unit size, reserve fund contributions, and utilities and services.

Occasionally, unexpected expenses or underfunding of the reserve fund may require additional funds beyond the regular condo fees. In such cases, the condo association may levy a special assessment, which is an extra charge to cover these costs. 

Condo fees are recalculated periodically (usually annually) to reflect changes in:

How Much Are Condo Fees Usually?

The cost of condo fees ranges from $50 to $1,000 monthly. It’s important to note that no standardized benchmark dictates the exact amount these fees should be.

Various elements can influence the cost. Aside from the factors mentioned above, other factors that might determine how much your condo fees are include:

What Influences The Cost Of Condo Fees?

Let’s delve deeper into the factors influencing the cost of condo fees.

Unit Size

Once the HOA calculates the annual cost of running a condo complex, they divide this cost among the individual unit owners. The total each unit pays is often based on unit factors, also known as entitlements.

Entitlements are determined by the size of the unit, its location within the building, or other factors that may affect the property’s value or the cost of its upkeep. For example, larger units or those with waterfront views may have higher unit factors and thus pay more in condo fees.

Amenities And Utilities

Amenities and utilities have a direct impact on maintenance and upkeep fees, which can ultimately affect the monthly condo fees. For example, buildings with gyms and swimming pools may have higher upkeep costs than those without. This results in higher condo fees for unit owners.

Location

Your condo’s location can significantly influence condo fees. Condos in vacation destinations might offer more luxurious amenities like private beaches, boat docks, or golf courses. These require more upkeep, resulting in higher fees.

Similarly, urban condos might offer conveniences like concierge services, adding to the cost. Other locational factors that might influence condo fees include:

Cost Of Living

In areas with a higher cost of living, such as major metropolitan areas or desirable coastal regions, the cost of services like landscaping, cleaning, and general maintenance can be higher. 

This, in turn, increases the operating costs for the condominium, which are passed on to the residents through higher condo fees.

Real Estate Market Conditions

In high-demand locations with higher property values, there may be a greater emphasis on maintaining high standards for common areas and amenities to preserve or enhance property values. This could result in higher fees to cover the costs of these enhancements and maintenance efforts.

Local Legislation And Regulations

Local laws and regulations can also impact condo fees. Some jurisdictions may have specific requirements for reserve funds, emergency preparedness, or building maintenance standards. These requirements can influence the cost structure of condominium management, affecting condo fees.

The Bottom Line

Condo fees are shaped by various factors, from amenity offerings to local economic conditions. When comparing condo fees, it’s essential to consider the absolute cost, what is included in those fees, and how they compare to other condos in the same area. Make sure you also look at the health of a building in comparison to its fees to make an informed decision.

Are you looking for a condo that aligns with your needs and budget? Explore what Hudson Condos offers and discover some of the best condos near you. We help you enjoy the convenience and community of condo living with the best condos. Start your search today!