In condominium setups, the entire building is commonly owned among those who own individual units. Common charges are designed to cover all the shared costs of amenities and services available in the building. This can include management fees, operating costs, amenities and staff salaries. It does not include taxes, as condo owners receive separate tax bills for their own specific unit, unlike co-op owners. Common charges come in addition to any mortgage payments an owner may have. Therefore it is imperative buyers know what costs to expect on this front.
What’s covered in common charges varies from building to building
Most common charges cover maintenance, but additional covered costs will vary by building. Some items that may be included in common charges are:
- Snow removal
- Hot water
- Electric bills for common areas, such as lobbies and hallways
- Pest control
- Bike room
- Plants / flowers / landscaping in common areas
The more common charges cover, the higher they are likely to be.
Common charges should be taken into consideration when making an offer
For buyers interested in condos, it isn’t enough to consider the cost of mortgage payments and taxes – common charges must also be factored into a buyer’s budget. Knowing exactly what common charges cover and what the cost is essential not only for establishing what a buyer can afford, but also for estimating resale value.
Common charges are not static and can be adjusted by the condo board. They may be adjusted for a specific period to cover a large expense like painting the exterior of the building, or they may be adjusted permanently for consistent expenses such as a cost of living increase in the wages of the employees.
The makeup of common charges
To calculate common charges, each condo unit’s percentage of common interest is multiplied by the cost of the included operating costs. The percentage of common interest in most buildings is solely dependent on the square footage of the unit, though it may also be affected by a unit’s location within a condominium building.
Further common charge considerations
When considering the purchase of a condo, a potential buyer may choose to look at how the condo board has raised common charges in the past and what they have raised them for. They can also look at action the condo board has taken to lower common charges, such as adding insulation for lower heating costs.