To say purchasing a home is costly is an understatement. Unexpected fees and expenses seem to come out of nowhere, meaning your budget could take a hit if you’re not prepared. If buying a condo, you’ll need to factor common charges into your list of monthly expenses in addition to a mortgage payment.
What are common charges?
Common charges are monthly fees you pay for the upkeep and maintenance of the building. This can include amenities, staff, and building maintenance.
Typical condo fees often include:
- Garbage collection
- Snow removal
- Utilities for communal areas
- Lawn and garden maintenance
When considering buying a condo, it’s important to take note of the cost of common charges, and whether or not you’ll be able to comfortably afford them. Common charges can vary greatly from one building to the next. Typically the swankier and amenity-laden the building, the higher your monthly fees will be.
How common charges differ from maintenance fees
In a co-op these additional monthly charges are called maintenance fees. Similar to common charges, these fees also cover building operating costs, amenities, and building upkeep.
Each co-op unit owner is given a number of shares based on the size of their unit and where it’s located within the building. For example a person who owns a penthouse unit will have more shares than someone with a smaller unit on a lower floor. The more shares you have, the higher the monthly cost.
Since co-op residents don’t own their property outright and instead own shares of the co-op corporation, property taxes for the building are rolled into the monthly fees along with any mortgages the building may have.
Conversely, condo owners are billed individually for their taxes. For this reason, condo monthly fees are generally lower than those for a co-op. In both cases, the monthly fees in a co-op and condo are non negotiable.
Both condos and co-ops are subject to assessments
While the cost of the monthly fees are non-negotiable, common charges and maintenance fees can increase depending on operating costs and building needs. If the building has a leaky roof, or the HVAC system needs an overhaul, co-op and condo tenants will have increased monthly fees to pay for repairs.
These charges, called assessments, are determined by the building’s board members. These additional fees are temporary and usually spread out over the course of several months.
If you’re looking to save some dough, there are ways to keep costs down. For starters, pursue buildings that have low monthlies. If a building has amenities you’re not keen on, consider going to a place with fewer bells and whistles. There’s no use paying higher monthlies for amenities you won’t use.
Work with an agent to help research the building before signing on the dotted line. Check for any current assessments and capital projects. Dig into the building’s financial statements to see if they have reserves to pay for repairs, or if they tap residents for the cost instead. It’s much better to do your homework ahead of time, instead of moving in and immediately having your monthly fees increase because the boiler broke or the elevator needs repairs.
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