HOA Fees and Other Potential Costs of

Condo Hotels

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?

A: Yes.

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.

Q. According to what I have read on your website, www.CondoHotelCenter.com, the monthly charges per unit seem to cover that unit only.

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 reserves.

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.