Condo associations are set up to maintain the building and therefore maintain or improve property values. With the condo association comes fees which are called
special HOA assessments. They are usually a monthly bill the owners have to pay so the condo association can pay for the
condo association insurance, building exterior maintenance, grounds upkeep, water, common area electricity use, and possibly trash removal. Other possible expenses that would be covered by the HOA assessment include door people, management company fees, maintenance person, elevator service, etc.
The typical condo association is set up by the original developer of the building, whether it be new construction or gut rehab. With the condo association there should be formal legal document called the condo association bylaw, which describe the property, percentage of ownership, limited common elements such as hallways, parking, etc. There will also be another formal legal document called the condo association rules and regulations ; they lay out what can and cannot be done in and around the building. Examples of rules and regs are pets rules, pet weight limits, use of common areas, and even restrictions on smoking to name just a few.
Condo Associations can be self managed or run by a management company. Typically a smaller condo association will run itself. This means each unit owner will more than likely take a roll in the management of the building. Electing a president, secretary, and most importantly the treasurer. The treasurer is the person responsible for book keeping, paying bills, and making sure everyone turns in their monthly assessment on time.
Smaller condo associations tend to have lower special HOA assessments. This is great for the cash strapped buyer. However, the buyer beware! If the condo association is not putting enough money away to adequately pay for regular expenses and even worse, the occasional problem, there is a high probability the building will see a special HOA assessment. A special HOA assessment may be levied against a unit for many items. A common one is having to put on a new roof. This can be quite costly. If the unit owner does not pay the special HOA assessment a lien can be placed on unit. The condo association lien will prohibit the owner from selling or refinancing the unit. There is something to be said for strength in numbers.
With a larger condo association the buyer will run into higher monthly assessments. This can be a good thing or a bad thing. In a full amenity building the assessments can run to $1,500 per month or even higher. This is especially true in older and vintage buildings that require relatively more maintenance than newer buildings. With larger buildings, the condo association will be run by a management company. Depending on the management company, their fees can add quite a bit to the monthly assessment. But, if you want a well run building you have to be willing to pay for it. If the building is not well run, you at risk of your asset (home) depreciating.
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