If you are buying a NYC co-op, not only are you on the hook for a mortgage payment — if you financed — but you are also responsible for the monthly maintenance fee.
What does the maintenance fee include?
In condos, this fee is known as the “common charge.” For co-ops, the maintenance fee covers the operating expenses for the building and usually includes:
- Property taxes
- Any underlying mortgage (and interest) on the building
- Building insurance
- Management fees and salaries (i.e., doorman, maintenance)
- Common area upkeep, etc.
It can also include:
- Heat and hot water
- Plants and flowers in common areas
- Bike room or storage room use
- Pest control
- Parking spots
- Trash and snow removal
If electric is included, usually the maintenance fee is a bit higher in the summer due to air conditioning use. The specifics vary from one co-op building to another.
How big of a maintenance fee you pay is based on the number of shares your co-op unit holds in the corporation. In other words, the bigger the unit, the more costly the maintenance fee. It’s wise to ask your broker what exactly is included in the maintenance fee for a co-op building you are considering purchasing before you sign a contract.
How much will the fee go up?
Maintenance fees can be a major source of sticker shock for prospective buyers in the NYC market. Keep in mind that the maintenance fee quoted to you prior to closing on a co-op may change and fluctuate over the course of your co-op ownership (See differences between condos, co-ops and condops).
Co-op boards can require shareholders to pay extra cash to boost the reserve fund or for a specific project or repair. Broken elevators, paint jobs and restoration of the building’s facade are some examples of special, sometimes unexpected, but common circumstances that force co-op shareholders to fork out extra dough over a period of several months toward higher maintenance fees.
Not only should you pay attention to the current maintenance fee figure, but you should look into the trends in the maintenance fee for a building. Typically, due to higher fuel costs, you can expect the fee to rise anywhere between 2- and 8 percent a year.
It’s wise to ask the seller or seller’s broker for reasons for rises and decreases in the maintenance fee for a unit. It’s also wise to seek information on how the co-op board tends to spend the corporation’s money and what activities or projects it is or may consider implementing in the near future.
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