Z.G. from Cook County, Illinois writes:
Dear Mister Condo,
Can you clarify why condo monthly assessments are based upon percentage of ownership, rather than divided equally among the homeowners (like HOA fees)? The reason I ask is because all fees go towards common area items, such as staff, amenities, building utilities, etc. Percentage of “ownership” in these items seems to have no functional or practical value. It seems to me that location in the building, views and size of the unit should only be reflected in the purchase price between the seller and buyer, (which, of course, it is) but, not spill over and permanently be reflected in monthly assessments. What am I missing in understanding the logic behind this practice? Thanks!
Mister Condo replies:
Z.G., you aren’t missing anything! There are other ways to determine common fees but the percentage of unit ownership formula is the most common and one that has stood the test of time quite nicely. For all of the reasons you stated, certain units are more desirable than others – square footage, water views, parking, whatever. Those units have traditionally been charged with a higher percentage of unit ownership for purposes of determining common fees. The fee schedule is part and parcel of the governing documents and is quite difficult to change. In fact, owners who pay less in common fees would not be motivated to change the fees. It is part of what motivated them to purchase their unit in the first place. Your points about who uses what in terms of amenities or services is correct but irrelevant in the computation of the common fees and assessment schedule. That’s how the developer envisioned the fee schedule and that was what was offered to buyers to entice them to purchase. Since it is in the governing documents, rules about modifying the documents come into play if any attempt is to be made to change them. I think you will find that a supermajority of unit owners or no negative votes will be required. Neither is likely to happen. All the best!
A condo is usually a building or a group of buildings that share the common areas and perhaps amenities. The beauty is that everybody chips in for the expenses because they are stakeholders. Now, it is not more reasonable that a more expensive apartment (usually one with more square feet) has a higher value and should be taxed (yes, I said taxed because that is what assessments are) according to their value? In single family free standing houses the tax appraiser will value a property and the higher the value so too the higher the taxes. Nobody wants to ever pay more than they want to but it is a fair way to collect assessments (taxes).