Condo assessments, sometimes called association fees, are the payments made by condominium owners to cover the common expenses of the entire property.
The payments are usually made monthly to the condo association. They are not part of the mortgage payment to the bank or other lender.
The expenses the condominium assessments cover typically include, but are not limited to:
- Scavenger (trash pickup)
- Electricity for common areas
- Insurance for common areas
- Lawn cutting
- Snow removal
- Hallway cleaning
- Parking lot maintenance
- Professional management
- Long- and short-term replacement reserve
A properly funded association for a Chicago condo or suburban Chicago condo ot townhouse is very important to the health of the property and association. The shared expenses of an entire condo property must be kept current to keep necessary services coming in and to keep the property in good repair. Condo assessments must be paid whether the condo is occupied or vacant.
Condominium assessments are typically calculated on the percentage of ownership in the building, meaning the overall size of the condo. For example, in general, a two bedroom condo has more square footage than a one bedroom condo in the same complex and therefore is charged a larger monthly assessment fee.
Increases in the monthly condo assessments typically occur over time as expenses increase. Many things in life cost more than they did one, two and ten years ago, and so do the services, materials and labor that condominium assessments pay for. Assessment amounts are usually set each year when the condo association directors establish the annual budget.
Special assessments occur when additional funds are needed quickly to cover an unforeseen shortfall in the association budget. Perhaps a major roof repair came in excess of the anticipated amount and extra cash must be collected. Specials assessments should rarely occur if the association is being run correctly.
Condo assessments will vary from property to property because they often cover different expenses. When comparing assessments at different Chicago condo and suburban Chicago condo properties you are considering, be sure you know what is covered. For example, heat is included in the monthly assessments at some properties and would be reflected in a higher condo assessment.
A sometimes overlooked but vital expense is the condo association reserve. This is the association’s “rainy day” fund, to be used for infrequent, but inevitable larger expenses such as new roof(s), new water heater(s), etc. Each of these major components has an expected life span and an amount should be set aside regularly to fund their eventual replacement. Sometimes, special assessments are needed when the reserve has been routinely underfunded. OwnACondo.com suggests looking into the state of the condo association’s operating fund and reserve fund when deciding upon a property to purchase.
For more information about condo assessments, be sure to contact your condo specialist Realtor® or give us a call toll free at 866-696-2266.