Condominium association fees can cause a lot of confusion among buyers, especially since they tend to be higher than HOA fees. This difference boils down to what these fees cover and how these associations operate.
What are Condo Fees?
Condominium association fees are fees that unit owners pay to their condo community. These fees cover shared expenses within the association. Owners pay them monthly, quarterly, or yearly.
While exact expenses can vary from one condo to another, condo fees typically cover:
- Landscaping and snow removal
- Water and sewer services
- Trash collection
- Building insurance
- Exterior maintenance and roof repairs
- Elevator upkeep
- HVAC system maintenance
- Common area electricity
- Pool or gym expenses
- Security systems
- Management fees
- Reserve fund contributions
Do All Condos Have Fees?
Yes, every condo community has a condo fee. This fee is a standard part of ownership because all owners share the cost of maintaining the common elements. Even in smaller or older buildings with minimal amenities, some level of shared expense still exists.
Unfortunately, owners can’t opt out of paying these fees. Once a person buys a unit, they agree to pay their share of the fee. Fees are legally binding and enforceable.
In Illinois, the Condominium Property Act stipulates that condo associations have the authority to levy, expend, and collect condo fees (765 ILCS 605/18.4).
Are Condo Association Fees Mandatory?
Yes, condo dues are generally mandatory. This means that they are not optional or negotiable. When a person purchases a condo unit, they agree to fulfill certain obligations, including the financial responsibility to pay condo association fees.
Owner obligations are typically outlined in the governing documents of the condo association. The annual budget, prepared by the condo board, usually sets the fee amount.
If an owner fails to pay their dues, the association can take action. This can include late fees, liens, and other legal proceedings. In some states, associations can even pursue foreclosure to cover the unpaid fees.
Condo Fees vs HOA Fees
Condo fees refer to the fees owners pay to a condo association, whereas HOA fees refer to fees that owners pay to a homeowners association. While an HOA can also cover condominiums, they are more often associated with single-family communities.
The primary difference between condominium association fees and HOA fees lies in what they cover. Condo fees tend to be higher than HOA fees because there is more maintenance involved, so there are more expenses to share.
HOA Communities
In HOA communities, homeowners are responsible for individual maintenance. They maintain their own roofs, siding, and plumbing. They also pay for their own utilities. Meanwhile, HOA fees cover landscaping, common area maintenance, and other shared costs.
Condo Communities
In condo communities, unit owners are responsible for maintaining the interiors of their units. The association retains shared systems, such as building elements, roofs, exteriors, and even shared utilities. There are more common elements in a condo building, resulting in more shared responsibilities.
How Much are Average Condo Association Fees?
Condo fees can vary widely depending on the location, age of the building, included utilities, and the level of amenities. A high-rise in an urban center will likely have higher fees, for example, than a garden-style condo with no elevator or pool.
Nationally, condominium association fees typically range from $200 to $700 per month. Fees on the lower end usually cover fewer services. In high-rise buildings or luxury developments, fees can exceed $1,000 per month. This is because they tend to have more amenities and services such as concierge, upscale facilities, and added security.
In Illinois, condo owners can expect to pay somewhere between $300 and $500 per month for standard services. Older buildings may need more reserve funding to address aging systems, which can lead to higher fees. On the other hand, newer buildings may offer energy-efficient systems that keep costs lower.
It’s also important to note that fees can change annually. Several factors can affect increases. These include rising utility costs, inflation, and the rising cost of goods.
How are Condominium Association Fees Calculated?
It is the condo board’s job to calculate condo fees. This begins with the annual budget, which the board anticipates based on historical and current data.
While some condos split the costs evenly across all owners, many others rely on a percentage basis. This means that costs are divided according to the percentage of ownership each unit holds. Percentages of ownership can be based on square footage or unit type.
Apart from anticipated expenses, the board also typically includes reserve contributions in the budget. This money is set aside for major repairs and replacements in the future. The reserve fund helps the association avoid special assessments down the line.
Why are Condominium Association Fees Higher Than HOA Fees?
Condominium association fees are higher because condos have more shared components, thereby requiring more collective maintenance. These communities maintain everything from roofs and hallways to water pipes and HVAC systems that serve multiple units.
In HOAs, homeowners handle individual repairs themselves. Meanwhile, in condo associations, a lot of maintenance responsibilities are centralized. This increases the budget, which, in turn, increases condo fees as well.
Insurance also adds to the condo association’s expenses. In a single-family HOA, the association wouldn’t be responsible for individual homeowner insurance. While COAs are not responsible for individual unit insurance, coverage tends to be more extensive for condo policies. The condo must ensure the building’s structure as well as shared elements.
Finally, condo buildings require more frequent inspections and higher levels of compliance. Fire codes, accessibility requirements, and structural safety rules are more complex. The association must often hire engineers, consultants, or specialists to comply with local laws.
All of this can add up. While the fees may seem high, it is essential to remember that they support a wide range of critical services. Without those fees, the community and its residents would undoubtedly suffer losses.
In the End
Condominium association fees are integral to the continued operations and functionality of a condo community. Unit owners must fulfill their obligation to pay them or risk facing a number of penalties. Yes, they tend to be higher than HOA fees, but that’s mainly due to the nature and complexity of how COAs work.
Hillcrest offers HOA management services to communities in Chicago. Call us today at 630-627-3303 or contact us online to request a proposal!
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