Should condo HOA fee be based on square footage of unit?

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neowiser
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Should condo HOA fee be based on square footage of unit?

Post by neowiser »

I own a condo in a 10 unit HOA. The units range in size from 1200 sq ft to about 2000 sq ft, some are free standing and others are duplexes. When the association was formed in the 70's the HOA fees were proportional to unit square footage. Several years ago, the owner of the largest unit lobbied to make the monthly fees equal for all units, since many of the monthly expenses (gardening, water) are independent of home size. Special assessments (roofing/painting etc.) are still made according to square footage if warranted. He is also the board president and everyone went along with his suggestion because it seemed reasonable at the time.

Our master insurance policy is paid from our operating expenses and the cost has gone up significantly over the past few years, totaling about $15,000 per year now. The total policy premium is calculated on cost per square foot basis for rebuilding and includes coverage for liability of directors, landscape replacement, building code upgrades etc. Since the total premium is calculated based on our total square footage, I would like to propose that the premium cost be assessed according to square footage of the individual properties.

I discussed this with one owner who argued that we don't know whose unit might need rebuilding in a disaster, so we are sharing risk equally. I'm not sure if this is a valid argument, since our huge annual premium is a guaranteed expense while the loss of a unit is hypothetical and unlikely. Not sure if I should pursue it further.
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8foot7
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Re: Should condo HOA fee be based on square footage of unit?

Post by 8foot7 »

It does seem like the insurance policy protects each of your units equally, so paying for it equally makes sense. It doesn't protect a 1,200 sq ft condo less than a 2,000 sq ft condo, does it?
Journeyman510
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Re: Should condo HOA fee be based on square footage of unit?

Post by Journeyman510 »

Should folks get a vote per sq ft then?
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Re: Should condo HOA fee be based on square footage of unit?

Post by exodusNH »

neowiser wrote: Wed May 11, 2022 2:37 pm I own a condo in a 10 unit HOA. The units range in size from 1200 sq ft to about 2000 sq ft, some are free standing and others are duplexes. When the association was formed in the 70's the HOA fees were proportional to unit square footage. Several years ago, the owner of the largest unit lobbied to make the monthly fees equal for all units, since many of the monthly expenses (gardening, water) are independent of home size. Special assessments (roofing/painting etc.) are still made according to square footage if warranted. He is also the board president and everyone went along with his suggestion because it seemed reasonable at the time.

Our master insurance policy is paid from our operating expenses and the cost has gone up significantly over the past few years, totaling about $15,000 per year now. The total policy premium is calculated on cost per square foot basis for rebuilding and includes coverage for liability of directors, landscape replacement, building code upgrades etc. Since the total premium is calculated based on our total square footage, I would like to propose that the premium cost be assessed according to square footage of the individual properties.

I discussed this with one owner who argued that we don't know whose unit might need rebuilding in a disaster, so we are sharing risk equally. I'm not sure if this is a valid argument, since our huge annual premium is a guaranteed expense while the loss of a unit is hypothetical and unlikely. Not sure if I should pursue it further.
Let's say half of the policy premium go towards items that are independent of area. That leaves $7500 to split among the units. That's $750 per unit. The difference in size between the largest and smallest is less than 2:1. How much effort to you want to put into fighting for $375?

Your time would probably be better spent getting quotes for replacing the insurance. If you've been with the same company for many years, you're often overpaying since so many people don't pay attention to regular rate increases. You effectively wind up with a "loyalty penalty".
student
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Re: Should condo HOA fee be based on square footage of unit?

Post by student »

I think it is common that HOA fee based on size especially if there is a large size difference. At my condo, we all pay the same but the size difference is about about 20%. I don't think the change that this one owner managed to make is reasonable at all. He knew, or should have known, the difference when he bought it.

I agree with you regarding the premium.
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Re: Should condo HOA fee be based on square footage of unit?

Post by student »

8foot7 wrote: Wed May 11, 2022 2:42 pm It does seem like the insurance policy protects each of your units equally, so paying for it equally makes sense. It doesn't protect a 1,200 sq ft condo less than a 2,000 sq ft condo, does it?
But it costs more to rebuild a 2,000 sq ft condo that a 1,200 sq ft condo, right?
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Re: Should condo HOA fee be based on square footage of unit?

Post by psteinx »

8foot7 wrote: Wed May 11, 2022 2:42 pm It does seem like the insurance policy protects each of your units equally, so paying for it equally makes sense. It doesn't protect a 1,200 sq ft condo less than a 2,000 sq ft condo, does it?
The issue is that the cost is based on square footage.

Imagine, in fact, a very simple HOA covering only 2 units, 1200 and 2000 s.f. respectively.

Insurance company says they will charge $1/s.f. to insure, or $3200/year.

Bigger unit COULD argue, well, it's about 50/50 which of either unit might have a claim, so we should split the cost 50/50.

But that's wrong, because in the event there WAS a claim, if it were against the bigger unit, the claim would likely be higher, and that's why the insurance costs more with 1200 & 2000 versus if it were two units of 1200 each.

In general, I think basically ALL of the HOA costs should be by s.f.

It's a bit arguable, but I would say common area stuff that can't be tied to a specific unit (gardening/water) still benefit the bigger unit more proportionately. If the gardens were allowed to turn to weeds and brown plants, all units would suffer a drop in value that would likely be %-wise similar, but not dollarwise similar. A unit worth twice as much would see a value drop ~2x as much, if the landscaping were terrible all-around.
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Re: Should condo HOA fee be based on square footage of unit?

Post by JoeRetire »

neowiser wrote: Wed May 11, 2022 2:37 pmI would like to propose that the premium cost be assessed according to square footage of the individual properties.

I discussed this with one owner who argued that we don't know whose unit might need rebuilding in a disaster, so we are sharing risk equally. I'm not sure if this is a valid argument, since our huge annual premium is a guaranteed expense while the loss of a unit is hypothetical and unlikely. Not sure if I should pursue it further.
"Should" has nothing to do with it.
You have the right to propose anything you like. And if you can get enough other unit owners to agree, then it becomes the rule.

IMHO, it doesn't make sense.

If costs are shared based on square footage, should voting rights be apportioned likewise? Should the owner of the largest unit have 67% more voting power than the owner of the smallest unit?

Would you want every single expense to be apportioned based on the relevant square footage? For example in my HOA some owners have a double driveway and others have a single. Should the cost of shoveling driveways be apportioned based on the square footage of driveway? Should the cost of mowing the common areas be apportioned based on the square footage of lawn directly in front of each unit? Should end units (with more windows) be apportioned more for expenses involving windows? Lather, rinse, repeat...

(full disclosure: I'm the treasurer of our HOA. In our HOA I own one of the larger units, and our monthly dues are all equal. Our units are no condos; they are PUDs. We each have our own homeowners insurance. We have never had any assessments in the 10 years I've been here.)
Last edited by JoeRetire on Wed May 11, 2022 2:58 pm, edited 2 times in total.
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alex_686
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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

Association fees should be based on the actual cost per unit. They should also be simple and fair.

Generally this means by square foot. A good chunk of the association expenses tend to go towards capital expenses. Roof, sidling, etc.

The actual fees can be structured differently. Say a even division amongst all people.

The real answer is to review the by-lays. This document would set down exactly how association dues are calculated, which I strongly suspect is based on square footage. Changing the by-laws is next to impossible, so I strongly suspect that is where it is right now. For a small 10 unit condo, I would strongly recommend a simple percentage for all assets is the way to go. Simplicity is a plus. Fairness in this context is going to be highly subjective and ad hoc.
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Re: Should condo HOA fee be based on square footage of unit?

Post by psteinx »

I looked, briefly, at condos in a luxury building.

That building included amenities - a nice lobby, well maintained, etc. Probably various staff associated with it, too.

Yes, ABSOLUTELY a unit ~2x the size should bear ~2x the cost of maintaining that nice lobby. Does the penthouse dweller pay the same dollar amount as the studio apartment? I should hope not...

EDIT: I guess it's a little context dependent. Thinking about it, we have an HOA for our neighborhood that I *think* charges the same fee across the board, despite variations in house size. But it's a fairly small fee, relative to the size/value of the houses.
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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

JoeRetire wrote: Wed May 11, 2022 2:51 pm If costs are shared based on square footage, should voting rights be apportioned likewise? Should the owner of the largest unit have 67% more voting power than the owner of the smallest unit?
Yes, it should. Or at least it does for every residential condo that I know of.
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JoeRetire
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Re: Should condo HOA fee be based on square footage of unit?

Post by JoeRetire »

alex_686 wrote: Wed May 11, 2022 2:54 pm
JoeRetire wrote: Wed May 11, 2022 2:51 pm If costs are shared based on square footage, should voting rights be apportioned likewise? Should the owner of the largest unit have 67% more voting power than the owner of the smallest unit?
Yes, it should. Or at least it does for every residential condo that I know of.
(shrug) While we aren't condos, our HOA has one vote per unit without regard to square footage. As far as I know, all the other HOAs in our area are the same in that regard.
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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

JoeRetire wrote: Wed May 11, 2022 2:59 pm
alex_686 wrote: Wed May 11, 2022 2:54 pm
JoeRetire wrote: Wed May 11, 2022 2:51 pm If costs are shared based on square footage, should voting rights be apportioned likewise? Should the owner of the largest unit have 67% more voting power than the owner of the smallest unit?
Yes, it should. Or at least it does for every residential condo that I know of.
(shrug) While we aren't condos, our HOA has one vote per unit without regard to square footage. As far as I know, all the other HOAs in our area are the same in that regard.
I missed that you were not a condo.

Like I said in my first post the division should be fair and simple. If the major expense is a building then it makes sense to base it on square footage. If it is access to a community pool where everybody has equal access regardless of the size of the residency, then a per unit charge makes more sense.
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Re: Should condo HOA fee be based on square footage of unit?

Post by JoeRetire »

alex_686 wrote: Wed May 11, 2022 3:04 pm
JoeRetire wrote: Wed May 11, 2022 2:59 pm
alex_686 wrote: Wed May 11, 2022 2:54 pm
JoeRetire wrote: Wed May 11, 2022 2:51 pm If costs are shared based on square footage, should voting rights be apportioned likewise? Should the owner of the largest unit have 67% more voting power than the owner of the smallest unit?
Yes, it should. Or at least it does for every residential condo that I know of.
(shrug) While we aren't condos, our HOA has one vote per unit without regard to square footage. As far as I know, all the other HOAs in our area are the same in that regard.
I missed that you were not a condo.

Like I said in my first post the division should be fair and simple. If the major expense is a building then it makes sense to base it on square footage. If it is access to a community pool where everybody has equal access regardless of the size of the residency, then a per unit charge makes more sense.
So if exterior painting were the cost, I imaging that exterior (not interior) square footage would be the apportionment driver? Thus, end units should pay a lot more than middle units?
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8foot7
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Re: Should condo HOA fee be based on square footage of unit?

Post by 8foot7 »

However you see the OP's question, comparing a condo HOA with a detached home neighborhood is apples and oranges. Condos share infrastructure and I can see the argument where some infrastructure (siding, windows etc) benefits owners of larger units more than owners of smaller/inside units. Detached home communities typically share an interest in land and amenities, not shared walls and roofing, where everyone has equal access -- one home doesn't need more open space than another home, one home doesn't get more access to the pool than another, and there are basically no costs the HOA incurs that are based on the sq ftge of individual homes.
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Re: Should condo HOA fee be based on square footage of unit?

Post by psteinx »

alex_686 wrote: Wed May 11, 2022 3:04 pmIf it is access to a community pool where everybody has equal access regardless of the size of the residency, then a per unit charge makes more sense.
Sort of. IMO, it would depend on factors such as how great the difference is between units. For an apartment building running studios -> 3BRs, the latter are more likely to have families, kids, and visitors that use the pool and associated resources, and should be apportioned a higher % of the cost.

If the differences are mainly 3BR houses vs. 4BR houses, then a per unit division may be simpler (though I'd still sorta lean on having the biggest pay the most).
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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

JoeRetire wrote: Wed May 11, 2022 3:06 pm So if exterior painting were the cost, I imaging that exterior (not interior) square footage would be the apportionment driver? Thus, end units should pay a lot more than middle units?
Siding is a bad example. It is a common element. i.e., does it just benefit a single person? No - the entire building needs sidling. There are some edge cases out there, for example I know of a development with is a mixture of multilevel condos and single-family cluster homes were the cost structure is clearly different.

A better example might be windows. In some condos the windows belong to the owner, not the association. Corner units would have more windows so they would have to pay more when they had to be replaced.

Generally there is some flexialbity when setting up the association to determine what a fair allocation of ownership and costs are. But once the by-laws are written the are basically in stone.
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Re: Should condo HOA fee be based on square footage of unit?

Post by quantAndHold »

When I had a condo, the HOA dues were based on a complicated formula where each unit paid it’s own fair share based on size and amenities. So part of it was based on square footage, part was evenly split, and part was either charged, or not, depending on whether or not the unit was hooked up to the shared boiler and central AC.

So your HOA can make it as complicated as you want it to be. You just have to get people to agree.
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Re: Should condo HOA fee be based on square footage of unit?

Post by Dottie57 »

In my previous condominium HOA fees were by square ft. No amenities in the place. Insurance apportioned by size.

In my current condominium, there are two layouts. And HOA fee is determined is by size.

However I don’t know if current has apportioned insurance by size.
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Re: Should condo HOA fee be based on square footage of unit?

Post by adamthesmythe »

The allocation of HOA fees is set when the HOA is organized, and all owners agree to the arrangement when they buy in.

Of course, there are always provisions to change things, usually requiring the agreement of a supermajority of owners. Good luck with that. It's hard enough to get agreement for a change in paint color, let alone a change that takes away from some and gives it to others.

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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

adamthesmythe wrote: Wed May 11, 2022 4:49 pm Of course, there are always provisions to change things, usually requiring the agreement of a supermajority of owners.
I think the standard is a supermajority of owners and mortgage holders. i.e., you are going to need to go to all of the banks and get their buy in for the modification of ownership rights of their collateral.
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Re: Should condo HOA fee be based on square footage of unit?

Post by adamthesmythe »

alex_686 wrote: Wed May 11, 2022 4:54 pm
adamthesmythe wrote: Wed May 11, 2022 4:49 pm Of course, there are always provisions to change things, usually requiring the agreement of a supermajority of owners.
I think the standard is a supermajority of owners and mortgage holders. i.e., you are going to need to go to all of the banks and get their buy in for the modification of ownership rights of their collateral.
Yeah, that too. Not that it's ever likely to get that far.

With difficulty- sometimes minor and sometimes considerable- we have been able to update and make minor changes to the HOA documents.
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neowiser
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Re: Should condo HOA fee be based on square footage of unit?

Post by neowiser »

quantAndHold wrote: Wed May 11, 2022 4:36 pm When I had a condo, the HOA dues were based on a complicated formula where each unit paid it’s own fair share based on size and amenities. So part of it was based on square footage, part was evenly split, and part was either charged, or not, depending on whether or not the unit was hooked up to the shared boiler and central AC.

So your HOA can make it as complicated as you want it to be. You just have to get people to agree.
I guess keeping the fees equivalent has the advantage of simplicity, the insurance premium is the only expense that can be correlated to square footage. Rebuilding coverage probably accounts for most of the premium, but we also have liability coverage that everyone benefits from equally.
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Re: Should condo HOA fee be based on square footage of unit?

Post by LittleMaggieMae »

psteinx wrote: Wed May 11, 2022 2:52 pm I looked, briefly, at condos in a luxury building.

That building included amenities - a nice lobby, well maintained, etc. Probably various staff associated with it, too.

Yes, ABSOLUTELY a unit ~2x the size should bear ~2x the cost of maintaining that nice lobby. Does the penthouse dweller pay the same dollar amount as the studio apartment? I should hope not...

EDIT: I guess it's a little context dependent. Thinking about it, we have an HOA for our neighborhood that I *think* charges the same fee across the board, despite variations in house size. But it's a fairly small fee, relative to the size/value of the houses.
:) Should unit owners pay lower HOA fees based on what amenities they don't use? Don't use the gym - get a discount. Don't have a car - no need to pay for the upkeep of the parking garage. You don't want the doorman to do anything for you (your packages can stay out on the sidewalk, when your guests show up they can call you from the street and you can go down and let them in, etc...)

That could apply to the lobby - the mundane tenants who live in the building year round should pay more for their daily use - the Penthouse dweller, ok, I assume Penthouse dwellers have lots of places to live - so they aren't always living in their Penthouse - would pay less because they are there 3 or 4 months out of the year?? :)

OK, seriously. I know people who live in condo/townhouse ?communities/complexes? not sure what they are called with outdoor pools and a club house and all sorts of amenities that are paid for out of their HOA fees. They NEVER use the pool, the clubhouse, or any of the other services offered.- but they are paying for them. Why? Because it's all about the prestige of living in a "community" with pools and a clubhouse, etc...
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Re: Should condo HOA fee be based on square footage of unit?

Post by Parkinglotracer »

The fact the insurance company charges per sq ft proves your point. If someone finds an insurance carrier that charges per unit then that proves their point. While all services don’t increase per sq ft - reconstruction surely does. You could have your hoa dues calculated by two parts … one from per sq ft and the other per unit if it’s a bind of contention.
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Re: Should condo HOA fee be based on square footage of unit?

Post by Chadnudj »

Journeyman510 wrote: Wed May 11, 2022 2:45 pm Should folks get a vote per sq ft then?
You laugh, but this is precisely how an old 4-unit condo building I lived in did it -- everyone's voting share was by proportionate square footage/value.

(In reality, this meant that so long as the units on the 2nd and 3rd floor agreed, they had 50% plus of the votes to do anything....which accrued well to me, living on the 2nd floor and getting along very well with our upstairs neighbors).
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Re: Should condo HOA fee be based on square footage of unit?

Post by student »

Chadnudj wrote: Wed May 11, 2022 8:21 pm
Journeyman510 wrote: Wed May 11, 2022 2:45 pm Should folks get a vote per sq ft then?
You laugh, but this is precisely how an old 4-unit condo building I lived in did it -- everyone's voting share was by proportionate square footage/value.

(In reality, this meant that so long as the units on the 2nd and 3rd floor agreed, they had 50% plus of the votes to do anything....which accrued well to me, living on the 2nd floor and getting along very well with our upstairs neighbors).
lol. Half joke/half truth. I think this is not more common because many people don't like math/can't do math.
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Re: Should condo HOA fee be based on square footage of unit?

Post by Kellerreiss »

When your association's board president "lobbied to change" assessment calculation policy, sure hope the association's governing Declaration was also legally amended, via recorded "100% owner-approved" amendment vote. Otherwise, board has no discretion to simply change this, and new methodology not legal, and thus inappropriate.

Let me guess, new assessment policy favored financial cost-burden assigned to this board president?
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Re: Should condo HOA fee be based on square footage of unit?

Post by JoeRetire »

alex_686 wrote: Wed May 11, 2022 3:20 pm Generally there is some flexialbity when setting up the association to determine what a fair allocation of ownership and costs are. But once the by-laws are written the are basically in stone.
By-laws can always be changed.
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Re: Should condo HOA fee be based on square footage of unit?

Post by Mr. Rumples »

One can argue that a larger unit can house more people and hence they use more of the amenities. When I lived in a high-rise, two bedroom units got a larger storage unit and two parking spaces, whereas one bedroom units (with or without a den) got only one parking space.

Our voting rights were technically "weighted" (apportioned), but owner votes on things like special assessments and the voting for the board were by wide margins, so we never really had to add up the fractions.

"Weighted assessments" usually reflects weighted ownership. For an owner of a large unit to give equal ownership to a smaller unit is giving away their property. Would that affect mortgages?

If the assessments are specified in the declaration and/or governing documents (terms vary by state), that would most likely require hiring an attorney, having a vote and changing the documents filed with the court (may vary by state). We considered a change to the governing documents when I was on the board (don't live in an HOA now); the estimate from the attorney was roughly $10,000 since the changes must be 100% in accordance with statute and the governing documents and some statutory requirements were buried not only in the HOA laws, but also in the laws governing non-profit corporations.

(As I recall, and its been over six years, one big caveat was not only were owners given a vote, but first mortgage lender approval was also required.)

There are many ramifications to changing assessments even when done in accordance with statutes; an HOA attorney would be able to advise the board on the ramifications in the relevant state.
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Re: Should condo HOA fee be based on square footage of unit?

Post by michaeljc70 »

Generally, they are based on square footage for condos or town homes. There are exceptions sometimes and the governing documents dictate how assessments are allocated and how votes are allocated.

The problem is the other owners went along with the owner of the largest unit. I would make sure this was done properly which would typically require a large % of the owners (typically 2/3rds or more) to vote to amend the declarations of the HOA. This would typically require a lawyer, sending formal notices to all homeowners in advance, etc. It is not a simple majority vote in most cases.

When you describe some units as freestanding, it sounds like they would require more maintenance than other units so a simple square footage allocation may not be fair/appropriate. Often though it is done based on square footage to keep things simple. You can have people make all kinds of claims otherwise that they should pay less (I live on the 1st floor and shouldn't pay for the elevator, I don't like flowers, I don't use the pool, etc.)

Edit: Also, the amendment for the change in how assessments are allocated would need to be recorded with the county or relevant municipality. I would check on that as most larger ones have those records online.
Last edited by michaeljc70 on Thu May 12, 2022 9:42 am, edited 1 time in total.
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Re: Should condo HOA fee be based on square footage of unit?

Post by Steelersfan »

In my condo common fees and voting rights are both by square foot. To change the allocation would require a 3/4 majority, using the square foot voting calculation.

It's doubtful smaller units would vote to increase their common charges. Unless larger units make up a high percentage of units there little chance it would pass.
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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

Mr. Rumples wrote: Thu May 12, 2022 5:59 am "Weighted assessments" usually reflects weighted ownership. For an owner of a large unit to give equal ownership to a smaller unit is giving away their property. Would that affect mortgages?
Yes, in 2 different ways.

For large units that would mean they would be losing voting powers. i.e., they would have less control. This could change the balance of power.

For small units this would mean increased responsibilities (i.e, higher HOA fees) but no increase in services.

Such, most of the time the changes are minor and will not have a material impact. However there are edge cases where it could have lots of impact or even be abusive. Thus whenever a change is made to the by-laws all of the owners, including the indirect ones like mortgage holders, need to review and sign off. If I was on the bank side I certainly would sign off on a pig-in-a-poke but rather would read and review the documents first.
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Re: Should condo HOA fee be based on square footage of unit?

Post by JamesSFO »

Our condos have a blend, the CC&Rs indicate which budget items are per unit and which are per square foot. Voting is per unit.

You state: "Several years ago, the owner of the largest unit lobbied to make the monthly fees equal for all units, since many of the monthly expenses (gardening, water) are independent of home size. "

But, I wonder what your CC&Rs say and whether they were legally/properly changed?
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neowiser
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Re: Should condo HOA fee be based on square footage of unit?

Post by neowiser »

JamesSFO wrote: Thu May 12, 2022 9:50 am Our condos have a blend, the CC&Rs indicate which budget items are per unit and which are per square foot. Voting is per unit.

You state: "Several years ago, the owner of the largest unit lobbied to make the monthly fees equal for all units, since many of the monthly expenses (gardening, water) are independent of home size. "

But, I wonder what your CC&Rs say and whether they were legally/properly changed?
Our Association was formed in 1974 and the CC&Rs and Bylaws have never been updated. Several attempts have been made over the years but always stagnated, usually when the assisting attorney retired. I am in CA where the Davis-Stirling Act controls the governance of HOAs. The original governing documents had language that said owners must create a policy for assessments. The original owners created a formula based on square footage to calculate the monthly fees. The vote to equalize the fees was almost unanimous because the owners with intermediate sized units didn't see any change in their monthly fee. The smallest 2 units now pay about $50 more per month and the owner of the largest unit pays about $50 less. For some reason, the insurance premium was never mentioned in the discussions.

I wrote to our insurance agent to ask whether the premium is directly computed from square footage. She said it is not, the premium is based on the cost to rebuild the buildings and only somewhat correlated to square footage. Since our duplex buildings are about twice the square footage of the individual buildings, it's possible that it will cost almost twice as much to rebuild them.

I am surprised at the number of Associations that give greater voting rights to larger units and relieved that we don't have that rule!
michaeljc70
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Re: Should condo HOA fee be based on square footage of unit?

Post by michaeljc70 »

neowiser wrote: Thu May 12, 2022 12:43 pm
JamesSFO wrote: Thu May 12, 2022 9:50 am Our condos have a blend, the CC&Rs indicate which budget items are per unit and which are per square foot. Voting is per unit.

You state: "Several years ago, the owner of the largest unit lobbied to make the monthly fees equal for all units, since many of the monthly expenses (gardening, water) are independent of home size. "

But, I wonder what your CC&Rs say and whether they were legally/properly changed?
Our Association was formed in 1974 and the CC&Rs and Bylaws have never been updated. Several attempts have been made over the years but always stagnated, usually when the assisting attorney retired. I am in CA where the Davis-Stirling Act controls the governance of HOAs. The original governing documents had language that said owners must create a policy for assessments. The original owners created a formula based on square footage to calculate the monthly fees. The vote to equalize the fees was almost unanimous because the owners with intermediate sized units didn't see any change in their monthly fee. The smallest 2 units now pay about $50 more per month and the owner of the largest unit pays about $50 less. For some reason, the insurance premium was never mentioned in the discussions.

I wrote to our insurance agent to ask whether the premium is directly computed from square footage. She said it is not, the premium is based on the cost to rebuild the buildings and only somewhat correlated to square footage. Since our duplex buildings are about twice the square footage of the individual buildings, it's possible that it will cost almost twice as much to rebuild them.

I am surprised at the number of Associations that give greater voting rights to larger units and relieved that we don't have that rule!
That is odd. Basically, people bought the units without any idea of what the assessments would be or how they would be allocated.

In our association, we get 1 vote per unit regardless of size. Though I can see going the other way because it makes sense to me that people that are paying more of the assessments have more say. I could see how that could be a problem if the unit sizes were vastly different and a small number of people could outvote the majority.

Based on what you've laid out, I see two options:

1) Since it is a $50/mo difference, just let things be.
2) Try to get enough fellow homeowners to vote to change how assessments are allocated. The big problem with this is that how many people will vote to increase their own assessments?
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JamesSFO
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Re: Should condo HOA fee be based on square footage of unit?

Post by JamesSFO »

neowiser wrote: Thu May 12, 2022 12:43 pm
JamesSFO wrote: Thu May 12, 2022 9:50 am Our condos have a blend, the CC&Rs indicate which budget items are per unit and which are per square foot. Voting is per unit.

You state: "Several years ago, the owner of the largest unit lobbied to make the monthly fees equal for all units, since many of the monthly expenses (gardening, water) are independent of home size. "

But, I wonder what your CC&Rs say and whether they were legally/properly changed?
Our Association was formed in 1974 and the CC&Rs and Bylaws have never been updated. Several attempts have been made over the years but always stagnated, usually when the assisting attorney retired. I am in CA where the Davis-Stirling Act controls the governance of HOAs. The original governing documents had language that said owners must create a policy for assessments. The original owners created a formula based on square footage to calculate the monthly fees. The vote to equalize the fees was almost unanimous because the owners with intermediate sized units didn't see any change in their monthly fee. The smallest 2 units now pay about $50 more per month and the owner of the largest unit pays about $50 less. For some reason, the insurance premium was never mentioned in the discussions.

I wrote to our insurance agent to ask whether the premium is directly computed from square footage. She said it is not, the premium is based on the cost to rebuild the buildings and only somewhat correlated to square footage. Since our duplex buildings are about twice the square footage of the individual buildings, it's possible that it will cost almost twice as much to rebuild them.

I am surprised at the number of Associations that give greater voting rights to larger units and relieved that we don't have that rule!
We've been told our 1995 CC&Rs need to be updated to match CA law, I would say it's well past time for yours to be updated. I'm not sure CA allows different voting by unit types?
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LilyFleur
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Re: Should condo HOA fee be based on square footage of unit?

Post by LilyFleur »

LittleMaggieMae wrote: Wed May 11, 2022 7:20 pm
psteinx wrote: Wed May 11, 2022 2:52 pm I looked, briefly, at condos in a luxury building.

That building included amenities - a nice lobby, well maintained, etc. Probably various staff associated with it, too.

Yes, ABSOLUTELY a unit ~2x the size should bear ~2x the cost of maintaining that nice lobby. Does the penthouse dweller pay the same dollar amount as the studio apartment? I should hope not...

EDIT: I guess it's a little context dependent. Thinking about it, we have an HOA for our neighborhood that I *think* charges the same fee across the board, despite variations in house size. But it's a fairly small fee, relative to the size/value of the houses.
:) Should unit owners pay lower HOA fees based on what amenities they don't use? Don't use the gym - get a discount. Don't have a car - no need to pay for the upkeep of the parking garage. You don't want the doorman to do anything for you (your packages can stay out on the sidewalk, when your guests show up they can call you from the street and you can go down and let them in, etc...)

That could apply to the lobby - the mundane tenants who live in the building year round should pay more for their daily use - the Penthouse dweller, ok, I assume Penthouse dwellers have lots of places to live - so they aren't always living in their Penthouse - would pay less because they are there 3 or 4 months out of the year?? :)

OK, seriously. I know people who live in condo/townhouse ?communities/complexes? not sure what they are called with outdoor pools and a club house and all sorts of amenities that are paid for out of their HOA fees. They NEVER use the pool, the clubhouse, or any of the other services offered.- but they are paying for them. Why? Because it's all about the prestige of living in a "community" with pools and a clubhouse, etc...
The condo development where I live has a pool, a clubhouse, and a tennis court. I bought this condo because it was the lowest price point in a VHCOL city. I was recently divorced, and I needed to live where my son could walk to his school when I got a full-time job. I would much prefer to be in a single-family home with no pool, no tennis court, and no clubhouse.

We had an assessment recently, and many of the balconies had to be rebuilt. My friend who owns her own single family home said to me, "You are on the ground floor and you have a patio, not a balcony. Do you have to pay for the balconies to be rebuilt?" I said, "Yes. If the balconies fail, they fall on my patio."

There are advantages and disadvantages to an HOA. I very much appreciate not having to supervise the gardeners and construction workers. Where I live, many of us could not afford a single family home, so we live in condos and can still be home owners.

There are two-bedroom units and three-bedroom units. The three-bedroom units are 160 square feet larger than the two bedroom units. Each unit has a one-car garage and an assigned parking space. We all pay the same HOA monthly fee. Units with more than two cars have the option of buying a parking permit for around $300 a year for the use of a parking space in guest parking.
Last edited by LilyFleur on Thu May 12, 2022 1:36 pm, edited 2 times in total.
cbs2002
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Re: Should condo HOA fee be based on square footage of unit?

Post by cbs2002 »

in my limited experience (two) this is the norm for condos, and it is eminently fair. You can't solve for every individual living situation, and that's one of the benefits/drawbacks of condo living. But larger units are more likely to have more people, use more utilities, cause more wear and tear on common areas, and consume more of any eventual insurance settlement. So yes, it makes sense. And full disclosure I owned a larger unit, gritted my teeth from time to time, but paid and got on with it...
alex_686
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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

neowiser wrote: Thu May 12, 2022 12:43 pm I am surprised at the number of Associations that give greater voting rights to larger units and relieved that we don't have that rule!
So let me give a example that may be more intuitive.

Consider a condo storage arrangement. Think heated garages / man caves where people store classic vehicles. Sometimes commercial strips where light Manufacuring is done. Normally these are done 4 to 10 units long. Consider one of these in a 6 configuration - expect it isn't. When one is built it was built as a double. So 4 standard sized units plus one double.

What is the right way to weight association dues? What about voting rights?

Now step and think what you are actually buying when you buy a condo. You are buying the airspace that your condo occupies. Buy you are also buying a slice of the association which owns the land and the common elements. Note, the association has to pay the property tax for the land plus the upkeep for all the elements.

OK, picked out what you think is fair?

Next step - what if the person who bought the double wide configuration then buys his next door neighbor's unit and combines them. So now we have 3 singles plus a triple. What is the correct division here?
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
student
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Re: Should condo HOA fee be based on square footage of unit?

Post by student »

For $50 a month, just forget it, especially if you purchase the unit under the current rule.
an_asker
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Re: Should condo HOA fee be based on square footage of unit?

Post by an_asker »

alex_686 wrote: Thu May 12, 2022 1:48 pm [...]
Note, the association has to pay the property tax for the land ...[...]
Not in FL. The homeowners pay property tax on the appraised land value as well as the building value, as appraised. Ironically enough, a first floor condo AND a second floor condo pay property tax based on land value (I am assuming that the land value is divided by two).
Topic Author
neowiser
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Re: Should condo HOA fee be based on square footage of unit?

Post by neowiser »

JamesSFO wrote: Thu May 12, 2022 1:17 pm
neowiser wrote: Thu May 12, 2022 12:43 pm
JamesSFO wrote: Thu May 12, 2022 9:50 am Our condos have a blend, the CC&Rs indicate which budget items are per unit and which are per square foot. Voting is per unit.

You state: "Several years ago, the owner of the largest unit lobbied to make the monthly fees equal for all units, since many of the monthly expenses (gardening, water) are independent of home size. "

But, I wonder what your CC&Rs say and whether they were legally/properly changed?
Our Association was formed in 1974 and the CC&Rs and Bylaws have never been updated. Several attempts have been made over the years but always stagnated, usually when the assisting attorney retired. I am in CA where the Davis-Stirling Act controls the governance of HOAs. The original governing documents had language that said owners must create a policy for assessments. The original owners created a formula based on square footage to calculate the monthly fees. The vote to equalize the fees was almost unanimous because the owners with intermediate sized units didn't see any change in their monthly fee. The smallest 2 units now pay about $50 more per month and the owner of the largest unit pays about $50 less. For some reason, the insurance premium was never mentioned in the discussions.

I wrote to our insurance agent to ask whether the premium is directly computed from square footage. She said it is not, the premium is based on the cost to rebuild the buildings and only somewhat correlated to square footage. Since our duplex buildings are about twice the square footage of the individual buildings, it's possible that it will cost almost twice as much to rebuild them.

I am surprised at the number of Associations that give greater voting rights to larger units and relieved that we don't have that rule!
We've been told our 1995 CC&Rs need to be updated to match CA law, I would say it's well past time for yours to be updated. I'm not sure CA allows different voting by unit types?
I have been working with another owner to update our governing documents for more than one year, and we are almost finished. The Davis-Stirling website is an excellent resource to guide document revisions (https://www.davis-stirling.com/). Biggest change is that we can no longer require owners who rent their units to insist a one year lease, the maximum we can require is 30 days. The CC&Rs must reflect the change by July 2022 or the Association can be fined $1000 by the state. We also decided we needed to put termite inspections and treatment under the maintenance responsibility of the HOA, this was advised by our attorney. We were advised to put a cap on rentals at 25% but no one is in favor- that could be a thread in itself.
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Re: Should condo HOA fee be based on square footage of unit?

Post by abner kravitz »

I own a condo where the apportionment of fees was set by the builders in the 70s. Since then, a lot of owners have expanded their units (turning the huge attics into new bedrooms), so we are left with a situation where some owners with now crappy smaller condos are paying $900 per month while some with beautiful and larger condos are paying $600. The people paying the higher fees have more voting power, which is essentially worthless.

It is not a good situation, but the bylaws require 100% support to change it. Will never happen. Life goes on for me, I’m paying the $600. I think equal fees or square footage would be a lot more fair.
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JazzTime
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Re: Should condo HOA fee be based on square footage of unit?

Post by JazzTime »

I think the HOA should follow the federal tax model and be based on each owner's ability to pay. In other words, each owner submits his/her taxable income, then the HOA is assessed proportionately so that higher income individuals pay a higher HOA and lower income individuals pay a lower HOA. If that is a fair model for federal taxation, it should be a fair model for HOA fees. :twisted: :beer
student
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Re: Should condo HOA fee be based on square footage of unit?

Post by student »

abner kravitz wrote: Thu May 12, 2022 3:31 pm I own a condo where the apportionment of fees was set by the builders in the 70s. Since then, a lot of owners have expanded their units (turning the huge attics into new bedrooms), so we are left with a situation where some owners with now crappy smaller condos are paying $900 per month while some with beautiful and larger condos are paying $600. The people paying the higher fees have more voting power, which is essentially worthless.

It is not a good situation, but the bylaws require 100% support to change it. Will never happen. Life goes on for me, I’m paying the $600. I think equal fees or square footage would be a lot more fair.
Interesting. Were the attics living space before? I wonder whether these need HOA approval.
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Re: Should condo HOA fee be based on square footage of unit?

Post by abner kravitz »

student wrote: Thu May 12, 2022 3:49 pm
abner kravitz wrote: Thu May 12, 2022 3:31 pm I own a condo where the apportionment of fees was set by the builders in the 70s. Since then, a lot of owners have expanded their units (turning the huge attics into new bedrooms), so we are left with a situation where some owners with now crappy smaller condos are paying $900 per month while some with beautiful and larger condos are paying $600. The people paying the higher fees have more voting power, which is essentially worthless.

It is not a good situation, but the bylaws require 100% support to change it. Will never happen. Life goes on for me, I’m paying the $600. I think equal fees or square footage would be a lot more fair.
Interesting. Were the attics living space before? I wonder whether these need HOA approval.
No, just empty attics with the HVAC units in them. For years no approval was required (incorrectly) to convert the space, but now there is, which has caused more battles. You can renovate the attic, but for legal bedrooms you need additional egress, which requires a skylight, which needs member approval since the outside of the building is changed. Obviously the folks who have been denied permission are not happy.
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celia
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Re: Should condo HOA fee be based on square footage of unit?

Post by celia »

JoeRetire wrote: Wed May 11, 2022 2:51 pm If costs are shared based on square footage, should voting rights be apportioned likewise? Should the owner of the largest unit have 67% more voting power than the owner of the smallest unit?
+1. Under square foot voting if there are 10 different square footages, are you willing to turn voting into a big math problem every time you vote? There will be no privacy of vote, if that matters. Everyone will know how the biggest owner voted. Eventually, the small unit owner will see that her vote doesn’t matter unless she can make her proposal appeal to the large unit owners. If her vote won’t count, why should she ever volunteer to be on the board?

I think what OP needs to propose instead is to get new insurance quotes if the current policy is over 5 years old! But s/he should also prepare to be on the quote committee.
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Re: Should condo HOA fee be based on square footage of unit?

Post by alex_686 »

celia wrote: Thu May 12, 2022 4:41 pm .. are you willing to turn voting into a big math problem every time you vote?
That is not how it works. When the association is formed the percentage of ownership is determined and is set in stone. I mean, the owners own the association. That percentage of ownership should not vary over time unless something really big happens.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
student
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Re: Should condo HOA fee be based on square footage of unit?

Post by student »

abner kravitz wrote: Thu May 12, 2022 4:10 pm
student wrote: Thu May 12, 2022 3:49 pm
abner kravitz wrote: Thu May 12, 2022 3:31 pm I own a condo where the apportionment of fees was set by the builders in the 70s. Since then, a lot of owners have expanded their units (turning the huge attics into new bedrooms), so we are left with a situation where some owners with now crappy smaller condos are paying $900 per month while some with beautiful and larger condos are paying $600. The people paying the higher fees have more voting power, which is essentially worthless.

It is not a good situation, but the bylaws require 100% support to change it. Will never happen. Life goes on for me, I’m paying the $600. I think equal fees or square footage would be a lot more fair.
Interesting. Were the attics living space before? I wonder whether these need HOA approval.
No, just empty attics with the HVAC units in them. For years no approval was required (incorrectly) to convert the space, but now there is, which has caused more battles. You can renovate the attic, but for legal bedrooms you need additional egress, which requires a skylight, which needs member approval since the outside of the building is changed. Obviously the folks who have been denied permission are not happy.
Thanks for the info. Looks like for those units that were improperly converted, the HOA could play hardball and asks them to revert to original space unless the HOA fee is increased for these units. Of course, I don't know about local laws and your HOA bylaw governing these old conversions.
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