A new regulation, just rolled out recently in New York State, is about to place huge financial expectations on members belonging to condo and homeowners’ associations. As from spring next year, houses that become eligible for this charge will receive it in the mandatory sum of $739 every month. This will affect millions of Americans, many of whom already pay hundreds of dollars toward their local associations.
A burgeoning financial requirement
Under the new rule, every condominium building or planned community in New York State with at least ten units will be required to collect a uniform monthly contribution of $739. That figure represents a significant jump from the typical association dues most households currently pay. Almost three million U.S. households paid more than $500 per month to condo and homeowners’ associations in the past year, according to the United States Census Bureau.
Critics warn that this very steep increase will burden household budgets of North America and may induce some owners to think of selling their apartments off or opt out of shared-ownership housing completely.
The rationale behind the rule
The idea that state officials are advancing is that the charge is to help improve our long-term reserve funds with which to make buildings safe and well-maintained. Faced with waves of aging infrastructure and unpredictable repair costs, many associations struggle to pull together enough capital to cover major projects without special assessments or one-time charges.
It standardizes dues at $739 per month to avoid those last-minute surprises, which can be thousands of dollars per household in emergency assessments. Advocates maintain that the predictability of amounts paid will ease budgeting and avoid sudden spikes in costs for those in the association.
Who will be changed?
The changes will be most felt among homeowners and condo owners from large developments:
- Condominiums and planned communities with more than ten units fall into the new fee structure for all associations.
- Associations that collect dues at present below $739 monthly must also raise their dues to the required levels.
- Smaller associations and single-family-home districts are excluded from this requirement.
More than just a few thousands of association boards must restructure their yearly budgets, possibly setting off a domino effect of new board elections and governance changes as members weigh the necessity for raised dues.
Potential ripple effects in the market
Real estate analysts have predicted that the higher ownership costs may dampen demand for condo and townhome purchases in New York City and surrounding suburbs. Prospective buyers, already contending with steep purchase prices and taxes on properties, may decide against the purchase of units that would be subject to a $739 per month fee.
According to real estate agent Laura Hernandez, “the increased fees might limit up to 20 percent of buyers’ capacity in some markets. Listing times for association-owned properties could become much longer and on the parameters of downward pressure on price.”
Other economists see ownership becoming so costly that it drives up rental demand. Renters, however, may be slow in resolving their leases, which raises rents and fires further on housing shortages.
What homeowners should do now
While the rule comes officially into effect next April, homeowners may already take some proactive measures:
- Check current governing association documents to ascertain procedures utilized to determine fees.
- Attend upcoming board meetings to voice concerns or connect with alternative funding methods.
- Look into payment plans or hardship waivers that may be granted to some associations for the new legislation.
Financial advisors would recommend an extra buffer fund for at least six months fees to be saved for purposes of avoiding cash-flow problems. Homeowners anticipating having trouble should also contact state housing counselors to see what relief programs may be available to them.
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