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Condominium Association Dues: 12 Facts and Fallacies

Whether you newly bought a condominium or have owned one for years, you have probably accepted the monthly condominium association dues at face value. But did you ever take the time to really understand what condominium association dues are and why you have to pay them?  Fortunately, we can help as we shed light on this matter.

A condominium association due is payment due each month for expenses relating to maintenance and community operations and is collected by the property management office. The fee charged by the association is used to fund maintenance and improvements for property under their jurisdiction. These funds will be taken out from the association dues that you have paid for.

Make sure you know exactly what you’re getting into before you purchase a property subject to condominium rules and dues. Source: jrtampalaw.com

Since you’re paying with your hard earned money, it’s best that you get your facts straight.

We’ve compiled a list of Facts and Fallacies regarding condominium association dues and everything in between.

  1. THE CLAIM: The condominium has the power to cut off or deny basic utilities as well as the use of common amenities due to non-payment of association dues.

Fact or Fallacy: FACT

Failure to pay monthly dues may result to account delinquency and therefore you can be stripped of the right to use basic utilities and amenities of the condominium such as the swimming pool, function area or gym.

  1. THE CLAIM: The condominium association dues are fixed.

Fact or Fallacy: FALLACY

Depending on the operating expenses of the building, the cost of association dues vary in every project. If the building offers more amenities, then it is likely more expensive. The computation is based on the size (total area in square meters) of your unit, including the parking space or balcony, if you have one.

  1. THE CLAIM: The condominium association has the right to hand out penalties.

Fact or Fallacy: FACT

Failure to pay dues on time can lead to a penalty of 3 or 4% interest charge. When it comes to violating rules and regulations, you can either receive a warning or a hefty fine. Always assume that penalties will be enforced, though you might want to talk to a few people already living in the community to get their input on how the association handles violations.

  1. THE CLAIM: Condominium association dues are subject to tax.

Fact or Fallacy: FALLACY

The Court of Tax Appeals (CTA) has ruled that condominium or association dues as well as other fees collected from unit owners are not subject to income tax and withholding tax. This was premised on the theory that the money collected was merely held in trust to be used for administrative expenses incurred in servicing members and does not constitute any sale of goods or rendition of service.

  1. THE CLAIM: Condominium association dues cover insurance.

Fact or Fallacy: FALLACY

Condominium fees generally do not cover insurance for individually owned units. Instead each unit owner is responsible for securing adequate property and liability insurance.

  1. THE CLAIM: Low condominium association dues is a bad sign for condominium buyers.

Fact or Fallacy: FACT

Prior to buying a condominium unit, it is important to investigate the development’s condominium fee history. If the fees seem too low, the development could be in disrepair, or it might not have enough reserves to handle unexpected maintenance expenses. Fees could also be low to entice buyers while the developers sell all of the units. Once the property is turned over to the condominium association, however, the fees could increase significantly.

  1. THE CLAIM: I can opt not to join the condominium association so as not to pay the monthly association dues.

Fact or Fallacy: FALLACY

Upon purchase of a condominium, you are obligated to join that condominium association and pay monthly or annual association fees for the upkeep of common areas and the building.

  1. THE CLAIM:  I can choose not to follow condominium rules and policies since I pay my dues on time.

Fact or Fallacy: FALLACY

No one is exempted; even the President of the condominium association must follow all the rules and policies regardless of on time payment of dues. Every association has their own set of rules and level of strictness regarding enforcement.

  1. THE CLAIM: Only the Board of Directors is responsible in managing the affairs of the association.

Fact or Fallacy: FACT

Or sometimes called Trustees, manage the affairs of the association such as expenses, repair concerns and even neighbor disputes.

10. THE CLAIM: As a member of the condominium association, I am required to attend association meetings.

Fact or Fallacy: FACT

Typically, condominium associations hold regular meetings with their members to keep things running smoothly. Because these associations govern the rules, regulations, and maintenance of housing developments and complexes, these meetings are necessary and important. Common concerns include budget, repairs, election and complaints. You are therefore encouraged to be present during these meetings to participate, vote and be eligible for any elective or appointive office of the association subject to the qualifications as provided for in the bylaws.

11. THE CLAIM:  It is restricted to view financial records and other documents of the condominium association.

Fact or Fallacy: FALLACY

All records involving the affairs of the association shall be available for examination by all owners, holders of mortgages on the lots, and their respective authorized agents upon reasonable advanced notice, during normal working hours at the office of the association.

12. THE CLAIM: My status as a member of the condominium association can still be reinstated even after being tagged as delinquent.

Fact or Fallacy: FACT

A member who has failed to pay three (3) cumulative monthly dues or membership fees, or other charges despite demands by the association, or has repeatedly violated the association’s by-laws and/or declared policies, may be declared delinquent by the Board of Directors.

The President or the designated officer of the association shall notify the said member in writing of the violation and require a written explanation, within fifteen (15) days from receipt of notice, why he should not be declared delinquent.

If the member is found delinquent after a Board hearing, the Board also has the power by majority vote of all members, to reinstate the membership of the delinquent member, provided that unpaid dues, fees or charges are paid or the sanctions imposed are satisfied.

Condominium associations can be your best friend when they uphold a good management of the entire condominium, but your worst enemy when they expect you to perform expensive maintenance on your home that you don’t think is necessary, or impose rules that you find too restrictive. But keep in mind that diligent payment of dues is your way of keeping your home and the whole condominium in peak condition.

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