Condo Common Charge Increases

The five biggest expenses for a building are typically (in no particular order):

1) underlying mortgage/ground rent
2) property taxes
3) labor
4) ongoing maintenance
5) utilities including heat

In most condos, there's no underlying mortgage or ground rent, so #1 is simply not a factor.

while in a condo, #2 is divided up among individual owners, big condo buildings will hire lawyers to fight the city's assessment and bill back the costs of the attorneys. A good example here is Trump World Tower, where there's been a special assessment for years to pay the costs that Trump spent fighting the city to get the 421-a abatement granted. You can usually find this cost in the financial statements, and it's usually consistent.

#3 is typically a union contract renewed every three years, so in the short-term it's predictable.

So #4 and #5 are the biggest variables. Some buildings try to "smooth" those costs over time by using a reserve fund to fund maintenance improvements, and by buying energy futures contracts.

I'd say 4%-5% increases per year are "typical" but in a bad year, you could see low double-digits.

ali r.
DG Neary Realty

Labor & utilities are the big ones, followed by insurance.
Condos are not for profit, so everyone gets what they pay for and you pay for what you get.

front-porch is incorrect as to 1 and 2.

a condo owns no portion of the underlying land and can therefore a) NEVER give a mortgage to a bank (this applies to ALL condos) and b) can NEVER be taxed on the underlying real estate. as to b) a condo can secure a loan on behalf of the condo but such loan can only be secured by the CC cash flow (and thus the bank can begiven a right to assess) not by the land (mortgage).

front porch said that after the list?

front-porch said 'in most condos there's no underlying mortgage'...wrong. in no condo is there an underlying mortgage. and to get more specific with #2, front porch makes it seem that a condo's propoerty tax begins as a whole and then is divided up amonsgt the owners. again, incorrect. an individual condo unit is its own tax lot. no whole the divy - only parts (fromteh beginning) as to whether a condo shoudl ever fight an assessment on behalf of the owner - never because again, the individual unit is its own tax lot. as to the trump situation, a 421a was filed for by trump as sponsor....any added costs as to acquiring a 421a (which trump certainly incurred) would be passed off onto buyers by sponsor (because the 421a is a benefit passed from sponsor to buyer) not as a condo fighting for the 421a on behalf of owners.

no harm meant - just tightening up the explanation....

To tighten further: When a condo owns a unit, e.g. the super's apartment when that isn't part of the common elements, then the condo can borrow against that unit.

Condos can and do dispute the assessment of the whole building, on behalf of all the unit owners. The city assesses the whole condo (which for that purpose has a tax lot in the 7500 range) and then bills the individual units as per their PCI. The city does not separately assess each unit.

i would have answered the question as follows: your cc's will often increase as a result of increased maintenance, decisions to engage in captial improvements, costs asscociated with litigation, increased insurance costs, increased utility charges affecting the common areas, establishment or increase of a reserve fund. also if you are displeased with any of these increases and attempt to take the board to court, you will lose unless you can show that the board did not "act on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the company."

not sure if your first point tightens up orginal proposition - that is that "in most condos there's no underlying (the whole building) mortgage"...but yes a unit owner (in this case the condo board) can take out a mortgage on their (the board's) unit. In this case, since the owner are the other units (by and through the board), the debt service costs would be defrayed amongst the other unit owners.

as to you tax propostiion....even though i never said a board can't fight on behalf of owners - as to whether they SHOULD and the general notion that 'the city does not assess seperately', I am not sure where you are getting your info. The condo act (RPL339y) requires that each condominium unit, together with its common interest, be assessed as one parcel, and provides that the SUM OF THE ASSESSMENTS of all the units "cannot exceed the valuation that the condominium as a whole would have if it were assessed as a single parcel." So, like i said, the condo is taxed as individual lots and then summed and its at least the stance of this board that any tax fight remains with the unit owner.

i do stand corrected that if the sum of the assessments do breach the cap, in other words enough of the units are affected as to warrant the board fighting for everybody as a whole (and a mjority vote to engage follows), then yes, the board should operate as agent on behalf of owner (see rpl 339-y4).