CONDO "FEE" FALLACY

Likely no aspect of condominium is as misunderstood or maligned as the so-called "condo fee".

Promoters of non-condominium housing often boast of "NO CONDO FEES" as if the majority of costs covered are unique to condominium. For the most part, the monthly assessment simply provides for regular payment of expenses that flow from operating, maintaining, and conserving any real property — regardless of ownership form.

In fact, "condo fee" is not even a proper term. You typically don't find it in legal and other authoritative commentary.

"Fees" are charges billed by professionals for services rendered.

Condominium assessments are completely different. Allocated to unit-owners on a monthly basis, but based on an annual budget, they represent a best estimate of funds required to operate the shared-property community.

The proper, precise term is contribution. This reflects the fact that each shareholder must contribute his or her portion to the fund set up to maintain the common property and administer the condominium corporation.

In most apartment complexes, a sizable portion of the "contribution" covers heat, hot water, ventilation, building insurance, and electricity costs for areas that service the private living spaces. These are regular expenses for every home owner.

Some expenditures, however, could be considered as condominium related. In addition to amenity-package, controlled-environment, and security advantages, a major attraction of condominium is the benefit of having day-to-day tasks taken care of on a consolidated cost-effective basis.

Consequently, maintenance, snow clearing, landscaping, and other tedious tasks are usually contracted out to ensure timely, competent, and uniform performance. But these are not really condominium costs — just voluntary cash payments for the elimination of effort and aggravation. Traditional house owners can, and often do, make similar decisions.

The "contribution" portion that relates to the cost of administering the condominium corporation is, though, a true condominium cost. Records must be kept; budgets created; funds collected, banked, and disbursed; and conscientious attention paid to a host of related matters. In other words, it must be run in a business-like fashion.

A condominium community may choose to self-manage every aspect itself. Or, it may decide to contract some level of external service — from bookkeeping to full management.

Obviously, the "fee" charged for that service arises from the community’s decision to employ a professional’s time and expertise. But, usually, it is just a small part of the overall budget.

So, calling the whole assessment a "management fee" or "condominium fee" is a regrettable, yet common, misnomer.