What are Condo Fees and how are they calculated?
Condominium, Co-op and HOA dues are collected by the management firm on behalf of the association to pay for a property’s common expenses. A portion of the condo fee is allocated to a reserve account, where the reserve funds may be used to cover emergency repairs and renovation projects when needed. Condo fees can fluctuate based on the level of service offered by the association, costs to operate the property and proportionate share of ownership. The proportionate share each owner pays is typically stated in the association documents and calculated based on the unit size owned by each association member. For example, an owner of a two-bedroom condominium will likely have a higher condo fee than an association member who owns a one-bedroom condo unit. Other associations may choose to split the common area maintenance expenses evenly between all units in the property.
The total amount of fees the management firm collects is determined by the association’s annual budget. The budget will usually include such expense items as property and liability insurance, repair and maintenance costs, accounting fees, management fees, snow removal, landscaping, and elevator service. Each owner is responsible for a portion of the association’s total operating costs, which include these expenses. The property management firm takes the sum of all operating costs in the annual budget and factors each unit owner’s proportionate share to calculate their individual dues to the association.
The Dreaded “Special Assessment”
Occasionally, condo owners have to pay additional fees as a result of a special assessment. These fees are collected when the budgeted income and/or money held in a reserve fund are not enough to cover large renovation projects like roof replacements. Special assessments can happen at any time during the year and can be just a few months of additional fees charged to each owner, or in some cases years, depending on the size of the project and the association’s reserve fund. Special assessment fees may replenish an association’s reserve funds or cover the monthly loan payment an association might take out from a bank if their reserve fund doesn’t have enough money to pay for the construction project. Similar to standard condo fees, special assessments are charged based on the association member’s proportionate share of ownership.
Technology Makes Condo Association/HOA Management Easier
How is your property management firm calculating, charging and collecting Co-op/HOA/Condo fees and special assessments? How are you tracking each owner’s balance, legal actions and foreclosure status if they are delinquent? Having the right property management software with all the tools you need to stay on top of everything from special assessment charges and violation tracking to document management, service request charges backs and more will help you deliver reports to the Board of Directors promptly and accurately, and collect association dues faster, which in turn will add value to your property management firm and give you a competitive advantage.
Contact us to learn more about how SKYLINE Property Management Software can help you manage HOA/Condo Associations.
Real Estate & Property Management