Condo Fees Definition
Condo fees consist of the monthly payments collected that cover a resident’s shared expenses for the upkeep of all common areas. Condominiums in older buildings or those having a greater amount of common entertainment and recreational features, carry higher maintenance fees.
Condo fees vary whether the resident moves into an older building, purchases a new condo or purchase a larger, townhouse style property.
Purchasing an Existing Condo
Generally, properties have condominium corporations or a board of members who manage property transactions. Collectively, these individuals determine unit fees, and monitor the need for necessary repairs, services or upgrades. The group establishes a reserve fund, or a contingency fund, designed to pay maintenance and repair expenses. 10–15% of a resident’s monthly fees are allocated toward this fund. Board members manage the property but the group employs typically an onsite manager, or a professional management company as well. Many property complexes employ 24-hour onsite security services for the safety of occupants. Condominiums often provide general housekeeping services for common areas.
Condo owners can expect to pay upkeep fees in addition to their monthly mortgage payments, property insurance, taxes and utility bills.
Purchasing a New Condo Build
Prior to construction, developers sell units based on floor plans. The law requires that developers accurately itemize all occupancy fees. Usually, when more than half of the projected units sell, building begins. Once completed, buyers move in during an occupancy period with interim closing. Residents obtain ownership and experience final closing after various legal formalities transpire. The time frame required typically extends four to six months.
Newly built buildings require various inspections and official registration prior to residents gaining full ownership. During the occupancy period residents pay the interest on the purchase price balance, monthly maintenance fees or monies allocated toward a reserve fund, a fraction of the property tax, along with utility bills and homeowner’s insurance.
Condo fees are not set in stone for the duration of ownership of the property and are subject to increases as well as levies, should the need arise such.
When arranging a mortgage for a home buyer purchasing a condo, our licensed mortgage brokers will discuss the impact of the condo fee on the qualification for the mortgage as well as the individuals future financial goals.
If you are interested in learning more about condo fees, please feel free to contact us today!