The Differences between a Maintenance Fee in a Co-op and a Common Charge in a Condominium

Posted on 3rd Sep 2016

Whether you decide to buy a co-op or a condominium, there is one thing you cannot escape: a monthly charge that you will have to pay. When it’s a co-op, the monthly fee is called a maintenance charge or maintenance fee, and in a condominium, it is referred to as a common charge or common fee. Although they are calculated similarly, they also have some significant differences. Co-ops and condos are not uncommon on the New York real estate scene, so it’s important to understand them.

Condominiums and Common Charges

The monthly common charges owed by unit owners are calculated by taking the percentage of each unit owner’s common interest and then multiplying it by the total costs for operating the building. Total operating costs include things like electricity, heat, air conditioning, and hot water in common areas such as the lobby and the workout room. Operating costs also include costs to operate any amenities the building offers, such as gyms, pools, front desk service, or playground equipment. If the building makes any revenue from laundry or other services, that amount is subtracted from the total operating costs, and what is left is the amount which must be contributed by the owners.   

How is the Amount Owed by Each Owner Calculated?

Each owner’s percentage of common interest is calculated by some combination of the total amount of square feet the condominium occupies in relation to the building, and other factors, such as the location of the condo within the building. So, for example, in most real estate markets the penthouse condominium will have higher common charges per square foot than a condo located on the same level.

Example of Common Charges

Once you subtract the income made from things like laundry from the operating costs of the building, the amount remaining must be borne by the residents. As an example, if the building you own a condominium costs $20,200 per month to keep running, and there is $200 per month income from the laundry and soda machines, then the common fees charged to the residents must equal $20,000 per month. If your common share comes to 2.5% of building costs, than your monthly common fee will be $500 per month.  

Co-ops and Maintenance Charges

Co-ops charge maintenance fees rather than common charges, and the charges themselves are calculated the same way. There are additional costs related to co-ops, however, specifically property taxes. The difference is that co-ops have shares rather than percentages of common interests. That is because co-op buildings function as corporations, and each unit is allocated a certain amount of shares, based on factors similar to those discussed in relation to condominium percentages.

Calculating Maintenance Charges

Co-op maintenance charges are determined by taking the total operating costs of the building, dividing them by the number of total shares in the building, and then multiplying that by the number of shares allocated to each apartment. So, if the operating costs of a co-op, including the property taxes, are $20,000 per month, and there are 5000 total shares, then each share amount is $4.00. If your co-op has been allocated 100 shares, then your monthly maintenance charges will be $400.

A real estate lawyer will help you understand if your condo or co-op fees are fair, or if any real estate laws are being violated by your building’s management.