Thursday, March 13, 2008

Question of the Day - Can a Management Company Raise the Condo Fees Higher than What was First Contracted?

Thanks to reader DE for the question.

The simple and straight answer is - yes. While initial advertised condominium fees are just about always below $160 per month on condominium conversions, they just about always go to $230 - $250 per month within two years. Initial condominium fees cover the basics, such as trash removal and the master insurance policy but developers dont always take into account the cash reserves that the association will need to begin keeping for that 'rainy day' when something happens.

In response to the exact question, I would ask if there was originally a management company in place when the unit was purchased. If not, then the unit owners have to pay for the management company's fees in addition to their standard costs, after all, management company's dont manage for free. However, if, when purchased, there was a management company and the association has changed management companies and there is a strong increase in condominium fees due to the change, you may consider negotiating the management company's fees.

The third option is that by hiring a new management company or by changing companies, the new company has assessed that the original condominium fees being paid by the owners was not covering the expenses of the building and would have to increase the fee to pay for the building's updated expenses.

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