How Are Condo Fees Calculated: The Truth Is Out

How are condo fees calculated? We’ll remove the shroud of mystery for you

Waterfront Living how are condo fees calculated

There is a lot of money moving around when you buy a condo – or any real estate for that matter. Points, closing costs, inspection fees, down payment, mortgage insurance, moving costs, taxes, and condo fees are just a few places your money gets allocated.

Some are straightforward, while others are cloaked in mystery. Figuring out your mortgage payment or closing costs is easy enough to determine. You know ahead of time what your condo fees are, but how are condo fees calculated? If you’re going to be paying a fee every month, it’s only fair that you know how those fees are decided.

What are condo fees?

Condo fees aren’t calculated randomly. There is a science behind it. Fees boil down to basic math and percentages, but that’s getting too far ahead. What are condo fees, anyway?

Whether you live in a small condo with three units or a high-rise condominium complex with hundreds of people, you’ll pay condo fees. Condo fees go into a collective account to cover expenses such as electricity and heat in common areas, general maintenance, amenities, and salaries for the condo property manager, concierge, or any other service providers. Some of your condo fees are set aside to pay for bigger projects like repairing or replacing a roof or painting the exterior of the condo building.

One of the great benefits of condo fees is that when one of those extensive repairs becomes necessary, you’ve already paid for it. If you live in a condo with a workout facility, your condo fees cover that, too, so you aren’t paying an additional fee for a monthly health club membership.

How are condo fees calculated

So you’re paying condo fees. You know what they are used for, but how are condo fees calculated? As a condo owner, you own a percentage of the condo property – usually the square footage of your unit plus any storage or parking space. You also own a share in the collective spaces, like a pool, community room, or tennis courts.

Your condo fees are based on the amount of ownership you have. So if you own ten percent of the total condo property, your condo fees will be 10 percent of the yearly operating budget.

That’s the short version. Condo fees are calculated based on that percentage along with an estimated yearly budget. Your condo community’s budget considers expenses like garbage collection, paying a property manager, liability insurance for the grounds, general maintenance and improvements, plus an additional amount to set aside for the unexpected costs that invariably come up.

For instance, if the yearly operating budget for your condo community is $100,000 and you own 10% of the total property, your yearly condo fees would be $10,000. Divide that by 12 months, and you have a monthly condo fee of $833.34.

Obviously, the operating budget and condo fees can vary immensely, depending on the size, location, units, and amenities offered. While it’s true that no one wants to pay extra fees, once you understand where the money is going, and why your are paying a specified amount, it makes a lot more sense. And it hurts a whole lot less when you are sharing expenses with other condo owners! If you owned a single family home, you’d shoulder every expense on your own.

If you haven’t bought a condo yet, or if you have and are active in your condo association (and you are, right?), condo fees are something to take seriously. Don’t go for low fees just to make it easier on your wallet – that could end up hurting you in the long run. If the fees are too low, you could get hit with an assessment (an addition to your regular fees) to cover expenses that aren’t properly budgeted for.

Ask for a copy of the budget from your condo board or property manager to get a better idea of how your specific condo fees are calculated. In the meantime, go enjoy your condo amenities knowing they are paid for, and when something breaks, it won’t be up to just you to take care of it!

If you’d like to receive announcements about scheduled maintenance, events, or emergencies in your condo right on your phone, Evercondo is the app for you! Tell your property manager to contact Evercondo for a free demonstration today.

Do you have more questions about how condo fees are calculated? Or is there something you would add to this? Let us know in the comments.

  • Great article. The one area I’d expound upon is reserves, which are a huge factor in condo fees. You briefly mention how money is set aside for major replacements like a new roof. Reserves cover the big stuff – like roofs, garages, elevators, etc. However, because they are longer term expenses, many Associations fail to correctly budget for reserves, and many condo buyers (and even Owners) don’t fully appreciate that budget process. Worse yet, recent studies show up to 70% of Associations under fund their reserves. A failure to budget correctly on these items can lead to special assessments, which are no fun.

    • Grant Yim

      Great point!

      We’ll do our best to cover reserves in a future article as there is a A LOT to talk about on that topic.

  • Michael Clifton

    This statement, “Your condo fees are based on the amount of ownership you have. So if you own ten percent of the total condo property, your condo fees will be 10 percent of the yearly operating budget.” is not true in all jurisdictions. In Ontario, the “common interest” (percentage ownership) can be different from the proportion of the common expenses the owner has to pay.

    • Grant Yim

      Michael, you are totally correct. Thanks for the clarification. This is also an idea for a topic to be addressed on this blog in the future. Thanks!

  • Nasrin Sarrafi

    Hi, my condo are located in a land that each unit is separated from the otger one. The association has collected fees but now they are going to change the roof. Every other unit is one story but 3 of us who are two stories. As a result we have the smaller roofs . First they gave us an estimate based on the sqr feet of each roof. But now, they are saying you have to pay twice everyone else which is huge difference with their first estimate. They want to collect the money. What we 3 are suggesting is to let us do it on our own using tge same contactor or pay it based on the sqr feet of our roof since it seems very unfair to us. I would appreciate it greatly if you give us the advice on the matter. Thanks

    • Grant Yim

      Hi Nasrin,

      Obviously, the best thing to do would be to try to talk to the board about this and present your case. If that doesn’t work out, I would advise you to seek a condo lawyer. It really depends on what your condo’s by-law states about such repairs.

  • Leon Gower

    Quick question. Our condo has storage lockers, but the storage lockers are not all the same size. The condos in our building average 700sqf but 2 condos are 1200sqf. Mine is 1200sqf, but I have one of the smallest storage lockers. To me it doesn’t seem reasonable, is it legal? I do know, when I purchased the condo, the board had no map of who was using what storage locker, no official allocations. Now they’ve “mapped it out” but that hasn’t changed which storage locker I have.
    Location is Alberta.

  • Greg Hines

    I am trying to get clarification. We own a unit in a condo in Miami Dade County in South Florida. The board charges each unit the same exact amount. There are 20 units in total including mine, however three are 35% larger than the others. Is that legal?
    Thanks so much