The Dilemma of Monthly Condominium Fees

• Condominium living can take a toll on your budget as are many costs associated with house ownership. In spite of the convenience that condominium living offers, the monthly common expenses tend to be the item that is more frequently talked about (often in frustration) then other elements of this style of living and often ridiculed to the alternative, “freehold housing” expenses. Furthermore, the discussion of condominium expenses often gravitates to comparing the burden of these fees from one building to another. As we know, different complexes can have drastically different fees but what we often don’t consider is how dissimilar these condominium complexes can be even though they may appear quite similar at a glance. Home buyers will speak about a new 35 floor high rise and how reasonable the common expenses are when comparing it to another building, or maybe their own building. Admittedly, it can be a little convoluted as you have to consider many factors which can be a lengthy list of criteria to research. This article will discuss, and hopefully clarify, this misconception in hopes of helping residents understand the differences and why they are, in some cases, justifiably different.  I will discuss, in point form, four categories that have likely the greatest significant impact on those fees and should always be considered for any potential condominium buyer.  

1. Under Construction or Recently Constructed Buildings: One of the first items we should clarify is when a condominium is in the process of being built when developers are promoting their units or when the building has recently finished construction and unit holders start listing properties for resale. It is often with delight, yet misleading, how reasonably low the fees can be. How are they doing it? Because developers compete with other condominium projects for unit sales and comparisons are based on per square foot costs and estimated budgets, common expenses are often underestimated to unit purchasers.[1] However, after the complex becomes registered, a condominium corporation and its new board of directors is formed and it is then revealed, through process, that the fees are heavily insufficient, and then adjusted upward to reflect its operation expenses for short and long term. I have seen it when it practically doubled after the corporation took control.
2. An Aging Building: The age of a building is another factor to consider. Even after the condominium corporation has been formed and fees properly adjusted in that first year or two it is still a relatively new structure.  Major (and minor) components in the building are new and are a long way off from breaking down. These components have an expected useful life which is generally long term. Condominiums have reserve fund studies performed to protect us from surprises in such instances but in spite of that there is still unexpected charges or higher than expected costs that often occur which create pressure for the corporation to increase the monthly fees and are not accounted for in newer construction. New buildings still have new parts that are far from their demise, whereas older complexes are now accounting for these breakdowns and the fees are now truly realistic.
3. The Size of Building: The number of units and square footage is another major factor to consider. Operating expenses are shared by the number of units and ultimately square footage in each building. As an example, one of the heaviest expenses buildings incur is the concierge or security staff. I find best way of explaining that is through this illustration. - Let’s say the corporation has a 24 hour concierge. Normally that consists of three employees (8 hours for each staff per day) at, hypothetically speaking, $40,000 annually for each staff. That would be $120,000 per year ($40,000 x 3) for the condominium to budget for its concierge and security services. Elite buildings or extremely large complexes will often have more than one concierge but most buildings in the city have one concierge operating at a time. A building that has 100 units (roughly the size of Dakota) divided equally is $1,200 per year for each unit to fund that cost of $120,000. If the building contains 300 units the breakdown would be $400 per unit - $120,000 divided by 300. That is a very significant difference in cost to consider on a monthly basis for owners.
4. Amenities Offered: Another consideration to factor in is the list of amenities that the condominium offers. Because there are too many amenities to break down the important thing to know is how many amenities there are and what they are. Each amenity warrants a different expense. If there are amenities that carry hefty charges and you don’t care for them it may be a condominium worth avoiding. Pools, security staff and large gardens some amenities that will have a definite impact on monthly fees.

When comparing common expenses in different condominium buildings it is extremely important to know these factors before commenting on whether you think they are cheap or expensive and it is also important to calculate your fees on a per square foot basis. There are other criteria that come in to play when calculating monthly fees, as in municipal taxes, particularly when comparing different municipalities, but the list above should help realize that a little research is needed before we condemn or praise a condominium for its common expense fees.