When you own and live in a condo unit in Texas, you probably already are a part of a condominium association and pay condo fees. But what are the fees for, and how do they benefit residents and the community?
What are Condo Fees?
Condominium fees are the regular payments made by unit owners and residents to the COA. These fees help fund the operation and maintenance of the shared condominium building elements.
In condos, owners own their individual units and are responsible for the maintenance and repairs of those units. Meanwhile, the association handles and manages the shared elements everyone in the unit will use, such as elevators and stairs, common areas, water systems, and HVAC systems, among others.
The amount that each condo unit owner pays is usually based on what’s said in the COA’s governing documents. Some communities divide expenses based on unit size, while others assign ownership percentages to each unit.
What Do Condo Fees Cover?
These regular assessments usually cover the ongoing operational expenses of a condo property. Here are some of them:
- Building Maintenance: A large part of the collected condo fees usually goes towards the maintenance of the shared building. It funds the regular upkeep and repairs of shared elements, from roof repairs to elevator upkeep.
- Insurance: Condo fees also help pay for the association’s master insurance policy. This offers protection for common areas and shared parts of the building.
- Professional Management: If the COA hires professional community managers to handle daily operations, part of the condo fees go toward paying for this service.
- Utilities: In some condos, the regular assessment also pays for shared utilities and services, such as water, electricity, trash collection, and security.
- Amenities: The condo fees may also fund the upkeep and operations of shared amenities. Usually, these would include condos with gyms, clubrooms, parking spaces, and pools, among others.
Condo Fees vs HOA Fees
The difference between condo fees and HOA fees is pretty simple: condo fees are applicable to condominiums and condo associations, while HOA fees are collected in developments with single-home properties.
In a homeowners association, residents usually maintain their own property. The association for these communities oversee common amenities in the neighborhood, such as roads and shared landscaping.
Meanwhile, a condominium association manages shared amenities and elements in the shared building itself, which may include structural components and shared systems.
Average Condo Fees in Texas
Condo association fees in Texas may vary widely. Many standard condominiums usually charge around $150 to $400 monthly. However, larger buildings in urban spots can charge higher, ranging from $400 to $1,500 every month.
The amount will depend on several factors, usually including the property’s age, size, amenities, and location. Smaller condos with fewer units may have lower monthly fees. Meanwhile, larger, high-rise buildings in major cities like Dallas, Houston, Austin, or San Antonio might charge higher fees because the building needs more upkeep and higher insurance coverage.
Why are Condo Fees so High?
Condo association fees usually seem high, but they cover many expenses in one payment. Here are some factors that may also contribute to that high rate:
Rising Insurance Costs
One of the largest expenses a condominium association will need to pay for is insurance. It’s also one of the biggest reasons condo fees increase. Your HOA will need coverage for the shared property, and premiums may rise due to several factors, including building age and claims history.
Whenever the condo association’s insurance premium goes up, the expense is usually passed on to and split among owners, which leads to higher monthly fees.
Expensive Repairs
Like many other buildings and properties, condos need ongoing maintenance to keep them safe and functional. Many of its shared components, such as plumbing systems and common areas, will need regular upkeep.
However, repair costs can go up when labor and materials become more expensive, usually due to inflation. If the COA delays maintenance and repairs, the costs of performing them later on can become higher than when they were deferred.
Reserve Funding
Reserve funds ensure that a community association runs well and maintains good financial standing. This, of course, applies to condominiums as well, as they would need funds for future major repairs and capital projects.
This account helps the condo association pay for these large-scale but expected expenses without relying on special assessments. If the reserve fund is too low, the COA may decide to raise the condo fees to ensure it’s well-funded.
Having high regular fees is not always a bad sign. Sometimes, it’s part of your association’s long-term plan, helping avoid surprise assessments in the future.
Do Condo Fees Include Property Tax?
Typically, your regular condo dues will not include payments for property tax in Texas. Instead, those taxes are usually billed separately to each condo unit owner.
Because of this, the unit owner should budget for both costs separately. Condo fees are payments made to the association, while property taxes are paid to the local taxing authority.
Reviewing Condo Financials Before Buying
Before purchasing a condo unit, it’s also good practice to review the property’s financials. Here are other financial aspects potential buyers should review:
The Annual Budget
The association’s annual budget will reflect how condo fees are used. It should clearly explain how much money goes towards the different expenses needed to run the association.
A strong association budget should cover the COA’s current expenses while keeping reserves properly funded. If the community doesn’t have enough reserve funding, owners may need to shoulder higher, less expected costs down the line.
Ask About Special Assessments
A special assessment is an extra charge outside the regular monthly condo fee. It may be used for major repairs, emergency work, insurance shortfalls, or large projects.
Buyers should ask whether any special assessments are pending or recently approved. A condo with a low monthly fee may still become expensive if a large assessment is expected.
Review the Reserves
The reserve fund is one of the most important signs of a condo association’s financial health. Strong reserves help the community pay for major repairs without creating sudden financial pressure for owners.
Low reserves can be a warning sign. They may mean the association has delayed savings or kept fees too low for too long.
Understanding Your Condo Costs
Condo fees in Texas help pay for the shared responsibilities that come with condominium living. When owners understand what the fees cover, why they change, and how they compare with HOA fees, they can make better decisions before and after buying a condo.
Creative Management Company offers association management services to HOAs and condo communities in Greater Houston. Call us today at 713-772-4420 or contact us online to learn more!
Related Articles:
- HOA Reserve Funds: A Guide for Board Members and Homeowners
- What Do HOA Fees Cover for Community Associations?
- When Can Homeowners Sue HOA Board Members?
