HOA Fees and
Other Potential Costs of
Q: In the
condominium concept there is a distinction between
the unit area and the common areas. The unit owner
pays a monthly share of the upkeep of the common areas.
In the condo-hotel unit does
this principal still apply?
Q. If it
applies, then what is the average contribution for
condo hotels to the Home Owners Association?
A: That would be as hard a question
to answer as how many miles per gallon can a car get,
or why can't Shaquille O'Neal hit a free throw to
save his life.
HOA (Home Owners Association) fees
usually range from $.50 sq. to to $2.00 sq. ft., but
I've seen a few charge more. The average HOA fees
are between $1-$1.50 sq. ft., so the size of your
unit determines the average contribution.
to what I have read on your website, www.CondoHotelCenter.com,
the monthly charges per unit seem to cover that unit
A. That is not entirely accurate.
The monthly charges contribute to the maintenance
of the whole building but the INCOME you receive comes
only from revenue derived from the sale or nightly
rental of your particular unit. That is, even though
you may contribute to the cost of keeping up the restaurant,
banquet space or lobby bar, you don't get a cut of
the liquor sales from the Rabinowitz/Schwartz wedding.
Q. If the unit owner pays
no condominium fees to the association, how does the
property maintain these common areas and the "enclosing
envelope" of the property?
A. False assumption. They certainly
do. I've never seen a condo hotel without condo association
fees. And in some cases, where they have been below
average, the developer kept a greater share of the
rental revenue from the rooms. One way or the other,
the property's condition must be maintained, and the
developer is getting that money from his joint venture
partners, the condo hotel unit buyers.
Q. In the
agreements for use, is there usually a provision for
"special assessments" to cover unexpected
association costs or a shortfall in the replacement
A. Most developers hold back 3%-5%
of your share of the rental revenue and place it in
a sinking fund designated specifically for the renovation
and replacement of items in your particular unit.
As for special assessments, that may vary from contract
to contract, but one way or the other, the money is
coming from the people that will derive the benefit
of it, you.
Q. You are
to be congratulated on your website, it is comprehensive
and offers 98% (personal opinion) of the information
related to this particular type of transaction.
A. Thank you. We are working on the
other 2% of it now, and hope to be done shortly.
The above question(s) were submitted
via e-mail by a visitor to www.condohotelcenter.com.
The answer was prepared by Joel Greene, a licensed
real estate broker with Condo Hotel Center which specializes
in the sale of condo hotel units and fractional ownerships
in private residence clubs.