Comparing common element fees

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Attempting to compare Condominium common element fees is like comparing apples to oranges. Always was, always will be.

Let’s examine two identical properties, high rises located in the same geographical area. Both buildings have a pool, party room, security, underground parking and 5 board members.

Building A has a very proactive board; they have implemented a funding plan for their reserve that allows them to refurbish their building to keep them competitive in the condominium real estate market. They have service contracts in place for all of their equipment including recreational equipment in the common rooms. They choose to provide security 24 hours a day to the residents. They have initiated energy initiatives such as retrofits for common area lighting to help reduce utility costs. The demographics in this building are mostly families who utilize the common amenities and have a great deal of pride of ownership.

Building B’s board is a little more conservative, the demographics of this building are mostly empty nesters whose family has grown and gone. The amenities are utilized, but not by a majority of the homeowners. This building also has a great deal of pride in their ownership. There are various volunteer committees who maintain some of the common elements (for example a gardening committee, this saves on the landscaping costs each year. Security has been reduced to 12 hours during the evenings to help reduce costs and refurbishment of the common areas is only scheduled for every 15 years. While there are service contracts to maintain the pool and HVAC equipment, equipment in the amenity rooms is removed once it has exhausted its life cycle, without being replaced.

From the examples above, both buildings can appear cared for from the outside. Financially they tell two very different stories. Unless one has access to the financial statements and reserve fund studies of both buildings, it is not possible to determine if either building has been diligent about monitoring its surpluses and deficits, another factor which will impact common element fees.

This is not to say that either board for Building A or Building B is right or wrong. It is an example of different priorities for two groups of 5 people. This is a very simple example, in reality buildings such as the ones in this example, would have been under the direction of various boards throughout their life spans, each board with different agendas and priorities.

Hopefully this article gives some understanding of the pitfalls of comparing your common element fees with that of your neighbours.

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