The number one question that I am asked is what is covered in your condo Dues and how are they figured out….Let me answer those questions for the New Orleans Condo Market….
The condo fees differ by the condo association but there are the basic items that are the same for all condo associations. The casualty, fire, wind-hail and flood are almost always covered in the monthly fee. This is generally the largest share of the budget. The upkeep of the building and common areas are the next largest budget item as this is a shared expense by the owners. Once you get past these two main expenses you will begin to see differences. The common expenses are almost always based on the square footage of the individual unit. A 1000 sq. ft. condo will pay twice as much as a 500 sq. ft. condo in the same complex. The share % will be in the condo documents.
The HO6 Policy covers your possession and build outs with the walls…..
You are always responsible for things that break inside or get damaged within your condo. You use it and you keep it up as this is not common. You should always have a HO6 policy for you possessions and build outs within the condo. Often called “sheet rock in”. These are not expensive and lenders will require buyers to purchase these polices. Everyone should have one. The condo associations have high deductibles on their insurance policies and you may need to use these. My experience says this is a must have policy.
The most likely damages that I have seen come from water leaks from the roof, broken pipes, water intrusion of various kinds. The unit above you make have a toilet or tub overflow. All kinds of things can happen and you want to be protected. Most of the time these policies give you a fix within days and take care of you no matter what the fault is. These policies have lower deductibles that the large policies that cover the building and common elements.
The things that are common to all units share the common expenses. The sharing items in common areas can include lights, electricity,water, common area cleaning, trash, management, pools, gardens, termite contracts, gyms, elevators, security gates, parking areas and any common personnel on the payroll are covered in the fees. These fees will vary from condo association to condo association. A small condo association will generally be managed by the residents and have no personnel on staff.
The larger associations that want on site management, security, and full-time maintenance personnel will of course cost more but the share is split between many owners. Personnel on staff is one of the larger drivers in driving up the cost of managing a condo. It all depends on what the owners want and need.
What the owners want are covered in monthly condo fees is voted on by the owners and the majority wins. This can change over time as the owners may want new services or may want to delete some items that they no longer need.
The large condo associations generally have water, trash and sewerage cost in their fees. Many of the small associations that had individual water meters and gas meters before a conversion have each owner pay their own as the meters were already there. This will vary but the size of the complex will often dictate this.
Sometimes you will see the condo fee cover everyone’s electricity. This is not the norm and it really makes the fees go up quickly. This makes it expensive if you are using this for a second home and are not a full-time resident. This becomes a drawback when selling your condo as the fees get higher.
Condo Reserve Funds – Always needed
The Collection of Condo Reserves are a monthly expense. This is where the condo association collects a certain each month to hold in reserve for unexpected expenses. This is a buffer from rising cost and things that need to be replaced. This generally runs no more than 10% of the monthly fee. Lenders want to see at least 10% of the annual budget in reserve. This can fund updates , major repairs and large deductibles in the insurance policies. Not having enough in reserve means when you come up short there will have to be an assessment on each owner to cover damages or replacements…
Many condo associations have new owners put several months of condo fees into the reserve fund. This is not pre-payment of fees but goes in the reserve fund like a rainy day fund. This will be in the condo docs or added as an amendment. The management company will know if this is the case in their association. This tends to happen in the larger complexes. Always ask how much the reserve fund has in it as this may be an indication of future liability.
Now For some Uncommon Shared Expenses
1107 S. Peters or The Federal Fibre Mills has a common chiller system that is the air conditioning for all the buildings. It is a very efficient system but does make the condo fees go up and your electric bill go way down. The expenses of a system is thus shared. In most associations the a/c is on you along with the upkeep of your equipment.
700 South Peters has 24 hour security and a valet parking person during peak hours of the day. 24 hour security does add up but that is what some association want.
3915 St. Charles Ave or St. Charles Gardens has a part-time manager who is on site at certain times during the week. The association hired the manager to manage the condo association but did not need one full-time.
920 Poeyfarre or the Cotton Mill Condos has a central boiler system for hot water that all the units feed off of. This is a shared expense and the owners do not have to keep up their individual water heaters. There are none.
It does seem like a lot to remember so do not be afraid to ask questions. I do this daily and still have to ask as policies do change. I always suggest the buyers ask for the current budget so they can review each line item to get an idea of all the expenses that they will be paying in their monthly fees.
Historic Carver Theater To Open April 30 Next Post:
Is Your Neighborhood Cool? Campanella Digs In
[…] Source: https://canalstreetbeat.com/ […]