So you’re ready to close on the New York City co-op of your dreams. You’ve done your due diligence to save up a sizeable down payment, which in turn will lock in a feasible monthly mortgage. You’ve even stashed some cash away for closing costs and lawyer fees. But have you considered an often overlooked and deeply important sum of money: Maintenance fees? If not, don’t fret! We’ll break down everything you need to know about maintenance fees in NYC.
First thing’s first: What are maintenance fees in NYC?
Maintenance fees are monthly payments that shareholders must pay when they own property in a co-op building. The specifics of these fees are determined by the building’s governing body, also called a co-op board.
It’s important to note that maintenance fees are not included as part of a mortgage payment, but rather an additional payment that NYC co-op owners are expected to pay on time each month.
If you’re wondering why we’re not discussing condos in this article, it’s because condo owners pay “common charges,” rather than maintenance fees. You can learn more about common charges in NYC here.
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What do maintenance fees pay for?
To help demystify maintenance fees and their purpose, we spoke to Luke Hoback, a StreetEasy Expert and Licensed Real Estate Salesperson with boutique real estate brokerage The Agency. Maintenance fees “cover the operating costs of the building – things like staff, maintenance, the building’s underlying mortgage, insurance, cleaning, etc,” says Hoback. Basically, any labor and/or services that help to keep up the functionality and aesthetic of a co-op building is funded using maintenance fees.
Maintenance fees also cover NYC property taxes. As Hoback explains, “There is one blanket property tax payment for the entire building, and each unit’s share of the taxes are prorated to that shareholder via the monthly maintenance.” This is different from condos, where owners are solely responsible for the property taxes of their individual unit.
How much are typical maintenance fees in NYC?
Maintenance fees vary from home to home in New York City, and can be dependent upon individual building factors such as unit numbers, the amount of staff employed and debt obligations. The history of a building may also contribute to this number, as older buildings may need more frequent or expensive work. Other considerations include borough and neighborhood, so be sure to compare costs across available units when hunting for your perfect future home.
While there’s not one specific formula to help determine typical maintenance fees in NYC, “there is generally a reciprocal relationship between maintenance and the price of the apartment” according to Hoback. Let’s say we were comparing two different apartments in similar buildings; One unit has maintenance of $3,000 per month, while the other has maintenance fees of $4,000 per month. In this case, Hoback clarifies, “the unit with the higher maintenance will likely trade for less than its counterpart.”
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Are maintenance fees negotiable?
The short answer is: Maintenance fees in NYC are unfortunately not negotiable. When purchasing a unit in a NYC co-op, the amount of money you owe monthly is determined by the co-op board and is standard for all shareholders across the building.
However, Hoback is quick to point out that joining your co-op’s board once you close on your unit is a sure fire way to get your voice heard on a whole host of building-related issues, not least of all payment expectations: “Particularly if there is an opportunity to become the Board Treasurer, that person can look much more closely into how the corporation is spending their money and whether there are any opportunities to save in certain places.” So don’t be afraid to get involved!
Do maintenance fees fluctuate?
Yes, maintenance fees do fluctuate. It’s important to note that it’s much more common – and should be expected – for them to rise annually in accordance with inflation. “Particularly in the last few years, with the rising cost of fuel, property taxes, and labor, most buildings have seen larger than average increases in their monthly maintenance,” Hoback reports.
But a decrease in maintenance fees isn’t a total pipe dream. If you purchase a unit in a building that pays off its underlying mortgage, you could potentially benefit from decreased maintenance fees. The reason being that, “as soon as that debt obligation is satisfied, the ongoing costs for the building often go down substantially… this can be an opportunity to pass that savings along to shareholders in the form of a lower maintenance payment.”
Of course, this situation is not only unpredictable, but also completely outside of shareholders’ control. Therefore it’s advisable to purchase a home that is solidly within your budget, never banking on a potential decrease in maintenance fees.
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Don’t immediately discount homes with ongoing assessments
Sometimes a co-op board may choose to enact monthly assessments for specific periods of time in addition to maintenance fees. You might be thinking, “Seriously? Another monthly fee on top of my mortgage and maintenance?” We hear ya. But don’t discredit a building with an ongoing assessment just yet.
As Hoback points out, “Most often, buildings will utilize a temporary assessment in lieu of raising maintenance across the board, primarily because once that assessment ends, the shareholders’ costs go back down to their normal maintenance amount.” In certain cases, instigating these short-term assessments could actually cost you way less over time than a broad increase in maintenance charges across the board.
Hoback’s advice? “Have your broker do some due-diligence on [the assessment’s] purpose and make your decision with as much background on the situation as possible. It’s often a sign of a well-run building doing what they need to do in order to protect everyone’s investment in the corporation.”
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Connect with a StreetEasy Expert HereWhen house hunting, how do I locate maintenance fees on a listing?
While you can expect that monthly maintenance fees will be clearly and explicitly communicated to you throughout the buying process, you can also locate maintenance fees on home listings. On StreetEasy, these figures are posted at the very top of the listing body along with other associated numbers, such as your estimated mortgage payment. Simply locate the subheading “Monthly Maintenance” to determine the sum. One final pro tip: when searching for homes on StreetEasy, click “More Filters” and you can set a maximum limit for monthly maintenance fees and taxes.
Disclaimer: This content is not intended to provide legal, financial, or real estate advice. It is for information purposes only, and any links provided are for the users’ convenience. Please seek the services of a legal, accounting, or real estate professional before any real estate transaction.
