how do maintenances work?

Are you asking about a coop or condo?

In a condo -- I've never lived in a co-op -- records will be kept by the board indicating what the money was spent on, using regular accounting methods. I'm a member of my board, so I always get to see these records, but any resident should be allowed to, and I'd imagine that you and your broker would also want to examine them before buying. The last thing you want to do is get into a co-op with sky-high maintenance because there's a huge underlying mortgage on the land, which you and all the other tenants will be paying off.

both coop and condo. want to understand how they both work and any differences.

@sma202 - A good book (at least, *I* found it informative) with info on how co-ops are managed is Sylvia Shapiro's "The New York Co-Op Bible". See if you can track it down; it should be useful.

All is dictated by the offering plan for a condo in terms of allocation of percentage of the budget. In a coop it is allocated based on the number of shares.

Unless there is something in the plan that dictates that you get a copy of the budget being used for each year you will have to rely on an audited financial statement that shows the revenue and expenses of the building with some detail behind the expense numbers.

Depending on how large a building it will be very hard to understand the complete detail behind say payroll as if you have a super, multiple doormen, porters, etc, you are going to see one payroll number. Keep in mind that if you are a union building the salaries are dictated by the union contract. The rest of the expenses are also hard to figure out as it is repairs, general costs, management fees, etc.

And as triple zero pointed out for a coop you best find out about the underlying mortgage as the interest on that could really raise the maintenance fees.

Also when looking at a coop vs condo keep in mind that common charges in a condo are without real estate taxes which you pay on your own and the maintenance fees on a coop will include real estate taxes paid for the whole building.

We add up our monthly expenses and divide that figure by the total number of outstanding shares. Then we bill accordingly.

A coop issues a financial statement every year outlining the budget. This explains where the coop's money is going. If greater detail is desired, then the annual meeting of shareholders provides an opportunity for residents to ask the board to more fully explain a given expense or revenue stream. There should not be money going to "bureaucracy" since the board is not paid. Any sizable coop (and most small coops) will, however, have a management company that is paid.

Monthly maintenance fees for each unit in a coop are based on the number of shares assigned to the given apartment in the offering prospectus. Generally, the number of shares assigned to a given unit never changes. The board sets the amount of maintenance per share: let's pretend a coop's current maintenance fee is $1.50/share/month. The Board decides if they need to raise maintenance fees to balance the budget and have sufficient reserves. Say they decide to raise maintenance in 2013 by 5% per share to account higher interest being paid on the building mortgage, for a rise in city taxes, fuel cost increases, and/or labor cost increases that affect the building staff's salaries. This would result in the maintenance per share rising to $1.575/share. If a owner held 1000 shares, their 2012 maintenance would have been $1500/mo. In 2013 it would reflect the 5% increase and go up to $1575/mo.

Additional monthly charges may be assessed for amenities the coop offers for a fee; these can include a storage locker, access to a "private" in-house gym or club or pool or rooftop the owner elects to join, bike storage, etc.

For a condo, I leave it to others to post a breakdown of the process.

In a condo, your share of the nut is called "common charges" or CCs. In a co-op, it's called maintenance.

The basis of each apartment's share was determined by the sponsor when the building was built or converted.

In a condo, your unit's share is expressed as a percentage of the whole building. In condos with commercial units where some expenses are carried by either the commercial or residential units but not both, there'll also be a percentage of the residential total.

In a co-op, x number of shares will have been issued, with y shares apportioned to your apartment. y divided by x is the percentage of the expenses you cover.

Since you're just starting out, you might want to read Sylvia Shapiro's Condo/Co-op Bible.

To see financial statements and documents for a typical co-op, see http://350bleecker.com/owners