Fee hikes can be hard to swallow

Published 9:00 pm Saturday, January 21, 2006

Question: I own a condo. The mortgage is paid off and I am now paying only a monthly maintenance fee. My manager recently sent me a notice that this fee would increase by $55 a month for my three-bedroom unit. This has really hit me hard, since I get by on Social Security alone. I am in my 80’s and unable to work. I have been trying to sell my unit through a real estate agent, but they never seem to get many people to look at my unit. I’m just not sure what I should do, I can’t go on with this situation much longer.

L.A., Everett

Answer: It can be a shock to anyone’s household budget when a condominium’s monthly homeowner’s dues increase $55 per month, or more, especially when you’re living on a fixed income. However, in most cases, such a dues increase is not only justifiable, but usually overdue. Here’s why:

Condominium property managers are stuck in a very politically difficult situation. On one hand, they have an obligation to collect enough money to maintain the condominium property, on the other hand, they have to keep the monthly dues as low as possible so that the condo owners don’t revolt and hire another management company. In some cases, the managers bow to homeowner pressure and keep the dues lower than they really should be in order to keep the owners happy – and keep their condo management contract.

But eventually that kind of shortsighted budgeting always catches up with the condominium homeowner’s association. Sometimes, the owners are hit with a one-time lump sum “special assessment” to pay for deferred maintenance costs.

For example, when it’s time to replace the roof and the association’s reserve fund does not contain enough money to cover the cost, each condo owner might be hit with a $1,000 assessment to pay for their share of the roof replacement expense. I’ve even heard of cases where condo owners have had to pay special assessments of $5,000 to $10,000. So by comparison, a $55 per month dues increase is not too bad.

But, of course, perspective is everything.

And if you are on a modest, fixed income even a $55 dues hike may be too much to handle. I’m sorry to hear that your dues increase may literally force you out of your home. While you may not want to take this step, if you are serious about selling your condo, you should price your unit aggressively.

By that, I mean price it low.

If the real estate agent is not getting many people to look at your condo you either have a very poor agent, or more likely, your asking price is too high. Ask your agent for a computer printout showing the recent selling price of condos in your area. Then, lower your asking price to be slightly below the average sales price. Remember, I’m talking about the average selling price, not the average asking price. The market is pretty strong right now for condos if they are reasonably priced. And as the weather warms up and spring approaches, more buyers will be out looking for homes.

I understand that your primary goal is to stay in your condo, however, I don’t think there is anyway that you could get your homeowner’s association to make an exception for you and not raise your homeowner’s dues.

The association must assess dues based on the percentage of the total condominium complex owned by each condo owner. For example, one-bedroom condo owners pay less than two-bedroom condo owners because they own less space.

You have a three-bedroom unit, so you are at the upper end of the dues scale because you own a large unit. Since the annual dues for the condominium complex must be divided among all owners based on their ownership percentage, it is not possible (and probably not even legal) to give one condo owner a lower bill than other owners of the same sized condo units.

Mail your real estate questions to Steve Tytler, The Herald, P.O. Box 930, Everett, WA 98206. Fax questions to Tytler at 425-339-3435 or e-mail him at economy@heraldnet.com.