Condo living has become a common alternative for those who are always on the go. As condominiums are frequently found in the center of the city and give all the conveniences of home, it is convenient. Condominium unit are also often less expensive than single-family houses, but you may still have to pay for them.
When purchasing your first house, there are numerous aspects to take into account. To assist you make a decision about whether or not a condominium is the correct choice for you, it’s vital to be aware of the fees and other costs involved.
After purchasing your own condo unit and moving in, you unexpectedly received a statement of accounts stating that you must pay your association dues for the current month. But what precisely is it, and why must you pay this? Many first-time homebuyers are unaware of this ongoing cost that comes with owning a condominium, it is called condominium dues.
What are condo dues?
The condominium fee must be paid by each unit owner. This is on top of any other commitments, such as mortgage payments, property taxes, and homeowners and mortgage insurance. The condo or homeowners association will get this agreed-upon amount each month in exchange for maintaining the neighborhood’s general aesthetic and upkeep. As was already noted, these fees are intended to cover the costs of utilities, maintenance, landscaping, janitorial services, and general upkeep of areas like parking lots and garages, fitness centers, elevators, lobbies, common facilities, patios, shared indoor/outdoor spaces, and other amenities offered.
The monthly dues that some owners of residential properties are required to pay their homeowners’ associations is known as a homeowners association (HOA) fee or condominium dues (HOAs). These fees are gathered to assist the association with upkeep and improvement of the property. Unit owners are virtually always subject to HOA fees, but certain single-family house neighborhoods may also impose them. Condo dues serve the following purposes that should be understood:
One of the best things about owning a condominium is having access to amenities like playgrounds and swimming pools without having to worry about maintaining them. Also, you may unwind knowing that your residence or family is secure and cozy.
Organizations called homeowners associations are created to set and uphold regulations for particular properties and the people who live there. These neighborhoods typically develop in planned communities, subdivisions, or condominium complexes. Individuals who buy these homes are immediately members of the association. As a result, they are required to pay monthly payments, often known as homeowners association costs, as their dues.
Your monthly dues condo go toward building upkeep and repairs, taxes and licensing, wages for condo staff (property management staff, maintenance staff, security personnel, etc.), utility costs for common areas, and other miscellaneous fees necessary to keep the building and any public facilities in excellent working order. Your paid association dues will be subtracted when the building needs maintenance or painting.
Every property owners in a condominium complex contribute to a monthly dues condo fee that is used to pay for ongoing upkeep. The cost is determined by the size, amenities, and any recurring costs of the unit. For people who prefer a maintenance-free lifestyle, condominiums are intriguing.
Why do Condo Developers Collect Condo Association Dues?
Many first-time purchasers are unaware that condominium ownership entails a monthly dues condo called association fee, which they must pay in addition to their utilities such as water, electricity, cable, internet, and so on. Yet, many condominium owners are not aware of what is covered by their dues or what happens if they don’t pay. All of your inquiries concerning condo association dues will be answered by this article.
How Are Condo Association Fees Calculated?
Each condominium association is run by a group of people known as the board of directors. The board is responsible for setting the budget for the following year in addition to supervising community maintenance. The board will use this information to determine how much each condo owner will pay in fees.
The condo board must take into account all of the foundational costs of the association while creating the budget. They project what the COA will be required to spend for upkeep tasks like landscaping, snow removal, garbage collection, and other services. They also consider factors like insurance, electricity, housekeeping, property taxes, court costs, salaries, and other costs.
The board will divide the estimated cost of costs by the total number of condo owners in the association once it obtains this information. The board members themselves are included in this since they are not exempt from paying condo dues.
Who collects your payments?
The task of collecting association dues and other condo fees falls under the purview of the property management (PM) office. They are employed by the condominium developer to oversee building upkeep and management. They offer the services that locals need, such as security guards, maintenance workers, janitors, and other types of building maintenance.
Why do you need to pay association dues?
The unit owner or tenant contributes to the general operational costs of the entire condominium building by paying association dues on a monthly basis. The homeowners’ association requires this.
A house buyer automatically joins after:
- He or she is given control of the unit.
- the Deed of Absolute Sale having been executed by him or her,
- or the buyer receives the title in their name.
What are the possible penalties if the condo owner fails to pay?
Depending on the condominium developer, you can incur a penalty if you don’t pay your association dues on time. Some builders impose interest rates of 3% to 4%. If you make no payments at all, developers like Asterra will consider your account delinquent. When this happens, the management of the building has the right to turn off or refuse your necessary utilities. In rare circumstances, they might also prohibit you from utilizing the communal facilities.
Advantages and Disadvantages of Condo Fees
Although condominiums have a lot to offer and their maintenance-free lifestyle may seem enticing, owning a condo and thus paying a fee has both perks and downsides. Owning a condo ultimately means choosing to live in a situation where everyone is willing to pool their resources for the sake of the neighborhood.
ADVANTAGES
- Condo fees allow owners to live maintenance-free.
- Condo fees make planning for maintenance expenditures simple.
- Condo fees assist in avoiding costly homeownership repairs.
- Condo costs pay for extras like a clubhouse that a home may not have.
DISADVANTAGES
- Over time, condo costs may rise.
- Major repairs might result in increased costs from condo associations.
- For individuals who default or are unable to pay, members can have to fund the condo costs.
Property Owner Responsibilities
The age-old question, “What happens if you don’t pay HOA fees?,” is now answered. As you can see, anyone who doesn’t pay their assessments will face a multitude of repercussions. Missing payments are no laughing matter, from something as straightforward and as unimportant as a warning to more grave acts like foreclosure. That involves more than simply money. After you signed the deed of sale, you became a member of a HOA and were obligated to pay HOA dues.
Ask a HOA management firm like ours for help if your HOA is experiencing problems handling or collecting HOA payments.
When do you start to pay?
When the owner has possession of the unit, they are responsible for paying the association fees. You must pay the dues whether you have moved in or not, or even if the unit is empty. For instance, if you received the unit in May but didn’t move in until July, you still owe the association dues for May and June.
Are association dues subject to tax?
Dues paid to the condominium association are not taxable. According to a recent decision by the Bureau of Internal Revenue (BIR), association dues are not subject to 12% VAT. Association dues, membership fees, and other assessments/charges received by homeowners’ associations and condominium organizations were expressly included as exempt transactions in the recent Tax Reform for Acceleration and Inclusion (TRAIN) Legislation.
It is important that before you rent or buy a condo that you know what is monthly condo dues and condo dues in the Philippines.
