Difference Between Property Management Fees & Condo Fees

Navigating financial responsibilities of condo living can feel overwhelming, especially when trying to distinguish between property management fees vs. condo fees. Understanding these distinctions is crucial for both condo owners and board representatives. In this blog, we explore what each of these fees include, how they differ, and provide guidance to condo boards on effectively communicating costs to condo owners.  

Understanding Property Management Fees and Their Role 

Property management fees are payments collected by a property management company from a condo corporation in exchange for handling daily operations and upkeep of a condo building or complex. These fees cover services such as the collection of condo fees, coordination of maintenance and repairs, enforcement of community rules, guidance in setting annual budgets, and financial reporting to the condo board.  

How Much Are Property Management Fees? 

The cost of property management fees can vary widely depending on factors such as location, size, and amenities of the condo corporation, as well as the range of services offered by the management company. These fees are usually outlined in a contract negotiated between the condo board and the property management company, tailored to meet the specific needs and budget of the community. 

Property Management Fees Are Not Condo Fees 

There is a common misconception that the entire amount of condo fees paid by unit owners are for the property management company. But property management fees are only one component of the overall condo budget. The management company collects the total sum of condo fees which are deposited into a separate bank account held by the corporation. Then, managers disperse these funds to cover expenses outlined in the annual budget.  Condo fees include a lot more than just property management fees. 

What Are Condo Fees?

Condo fees, sometimes referred to as association fees or maintenance fees, are essential for covering the collective costs of running and maintaining the property. These regular payments from condo owners are vital for the upkeep of common areas and shared amenities, ensuring the financial health of the community. 

The condo board representatives set the fee structure based on the community’s budget and financial requirements. Owner contributions are usually based on the percentage of ownership they have in the condo corporation known as unit factors. This is often determined by unit square footage at the time of construction.

What’s Included in Condo Fees? 

Condo fees typically cover a range of expenses including, but not limited to: 

Maintenance & Repairs 

Routine upkeep of common areas, landscaping, snow removal, and necessary repairs to the building’s infrastructure. 

Utilities 

Shared utility costs like water, electricity, heating, and cooling of common areas. Individual unit owners must also pay for their utilities separately metered to their unit but those are personal expenses not included in condo fees with shared expenses. 

Insurance 

The most significant portion of condo fees is property and liability insurance that protects common areas and amenities. This does not include individual policies unit owners must arrange to protect what is inside their unit or any upgrades they make.  Owners should also make sure they are insured to cover the cost of the shared insurance deductible should they be responsible for damage caused to common elements. 

Reserve Fund Contributions 

A portion of monthly condo fees must be allocated for future large-scale repairs or replacements such as roofing or elevator overhauls. These funds are transferred to a separate bank account held by the corporation. 

Administration

Administrative expenses may include property management fees for handling the condo’s finances and operations throughout the year. They may also include wages and supplies required to run an on-site office depending on the corporation’s needs. 

Regularly reviewing and adjusting the fees annually is crucial to ensure they adequately cover all necessary expenses while maintaining transparency with condo owners. 

Other Fees That May Be Included in Condo Fees 

In addition to standard condo fees, owners may encounter other charges that can influence the overall cost of condo living. These additional fees may be included in their monthly condo fee payments or assessed separately, depending on the community’s financial structure and how owners use these spaces. 

Special Assessments

These one-time charges are typically charges to cover unexpected expenses or large-scale projects not included in the annual budget. 

Amenity Fees 

Certain amenities, like a gym, pool, party room, guest suites, or even elevator rental, may incur additional costs. These fees ensure that the upkeep and maintenance of such facilities are adequately funded and only charged to those who use them. 

Parking or Storage Fees 

Condo owners who require additional parking spaces, storage units, or lockers beyond what is allocated to their unit may need to pay extra. These fees help manage and maintain these resources which aren’t shared with all owners effectively. 

Security Fees 

If not included in regular condo fees, enhanced security measures such as hiring personnel or installing surveillance systems can lead to additional costs. 

Renovation Fees 

Should a condo owner wish to make significant alterations to their units, they may be required to pay fees related to the approval process, inspections, or potential impacts on common areas. 

Best Practices for Communicating Fees to Your Community 

Condo fees, including property management fees, are required for maintaining a condo, but open communication about fee structures is essential for a successful partnership between the property management company, the board representatives, and the condominium association of unit owners. 

The condo board members have the responsibility to ensure that the allocation and purpose of these fees are clearly communicated to residents to foster an environment of transparency and trust.  Here are some tips for the condo board of directors on communicating fees: 

Be Transparent 

Clearly outline what each fee covers in detail regularly. This includes the base fee for property management services, funds to cover operation expenses to maintain the corporation assets, and any extra charges for specific elements, tasks, or projects. Transparency is key to building trust in your community and making sure people understand where their money goes. 

Provide Detailed Reports 

It’s important to outline the value of each of the services the property management company oversees to help individual owners see the bigger picture. Quarterly or annual reports can help build trust and transparency. These reports should be easy to access and understand. 

Communicate Changes Promptly 

Share updates, changes, or new assessments to unit owners quickly and using multiple channels such as newsletters, emails, or meetings to ensure everyone is aware of and understands the changes. 

Address Any Concerns Promptly 

If anyone has questions or concerns about condo or property management fees, it’s important to address them promptly and provide clear explanations. Open communication is key to resolving any problems and keeping a positive relationship between the condo community members, the property management company, and the condo association.  

Partner with Larlyn Property Management 

By breaking down the cost structures and employing transparent communication strategies, condo board representatives can make sure that all residents understand and feel comfortable with how their fees are being used. 

At Larlyn Property Management, we strive to provide high-quality services to both property board members and owners. Contact us today for more information about property management services for condominium communities.