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Resident’s Association fees – we all know them, we all pay them, but it isn’t always clear to us how they are determined and what they are used for. These same fees are also used for repairing your building infrastructure, cleaning your stairwell as well as sealing your roof on rainy winter days. So how much do Resident’s Association fees cost and why? The following article will reveal it all.
Resident’s Association fees
Tenants living in shared buildings are required to pay a monthly or annual sum for the maintenance and care of the shared spaces in the building. These payments are charged by the building's representatives, who are responsible for liaising with various professionals, managing the money and responding to the tenants' requests.
Payments to the Resident’s Association are divided into two – routine expenses and exceptional expenses. Routine expenses include ongoing maintenance like cleaning the stairwells and the entrance area, gardening, maintaining the elevators, paying electricity bills and general heating bills. Exceptional expenses include one-time payments, such as painting the exterior walls and sealing the roof, renovating the mailboxes and the common space and upgrading the infrastructure of the building.
How are Resident’s Association fees calculated?
The amount will invariably differ from one residential building to another. The correct method of calculation can be found in section 58 of the Real Estate Law. It is important to note that before we turn to this section, in cases where there is a specific provision regarding the method of calculation in the building’s pre-agreed contract, it will prevail over the law.
There are several stages to calculating the cost and they are:
Percentage calculation: Multiply the total annual expenses by the percentage of billing of each of the property owners or tenants – this amount is the annual payment for the house committee.
Charging by the area of the property: Calculation of the relative share of the area of the property in relation to the other apartments in the condominium when the relative share is multiplied by the total expenses of the building.
Calculation according to the cumulative amount of the apartment: This is a complicated method that is rarely used. According to this method, the total cost is determined by combining the relative share of the balcony, the warehouse and a third of the parking space divided by the total area of the apartments.
Calculation under section 58: If the common building regulations do not define the method of payment, the method given in section 58 of the Real Estate Law will be applied, according to which the calculation will be made according to the ratio of floor space in the apartment.
Who is obligated to pay?
Similar to property tax and electricity bills, a Resident’s Association fee is defined as part of each tenant’s mandatory payments, and no one is exempt.
In some cases, there are buildings where only some of the apartments enjoy the common property (for example shared gardens). In such cases, the expenses will be limited to the maintenance of the common area. It is important to remember that these are mandatory payments – a tenant who does not pay the Resident’s Association fee, may find themselves being sued for the amount of the payment, plus legal and other related expenses.
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