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Loading...Loading...A condo association is made up of all the owners of units in a condo complex. It takes care of shared spaces, collects fees, enforces community rules, and keeps the building's common areas in good shape.
If you want to buy a condo, you'll hear the term "condo association" a lot. It's a term that comes up a lot when you're buying one, so it's important to know what it means before you sign anything. A condo association is made up of a group of people who own units in a condo building or development and make decisions about it. It's like a small government for your building. The association is in charge of all the shared spaces, like the hallways, elevators, pool, parking garage, and roof over your head.
A board of directors runs most condo associations. These people are other owners who the community chose to make decisions for everyone. The board makes the yearly budget, hires contractors to fix things, and makes sure the rules are followed to keep the building running. Some groups have board members who are volunteers take care of all this. Some people hire a professional property management company to handle the day-to-day tasks.
This is important for you as a buyer or owner. When you buy a condo, you're not just buying the space inside your four walls. You're also getting a share of the building's common areas. That lobby, that pool, that gym? You own a part of everything. And you have to pay monthly fees to help keep it up. The association is what makes all of that happen.
Community associations have grown steadily across the country. According to the Foundation for Community Association Research, approximately 373,000 community associations now exist in the United States, and nearly 80 million Americans call these communities home. Condominiums account for roughly 35% to 40% of all community associations nationwide.
The condo model has deep roots. The concept of shared ownership housing goes back centuries in Europe, but condominiums gained real traction in the U.S. after the Federal Housing Administration began insuring condo mortgages in the 1960s. That opened the door for middle-class buyers to own property in multi-unit buildings. Since then, the numbers have climbed steadily. In the early 1970s, there were only about 10,000 community associations in the entire country. Today, two out of every three newly built homes end up in some form of community association, according to the Community Associations Institute.
Condo associations don't run themselves. They operate through a combination of elected leadership, legal documents, and community rules. When you buy into a condo, you automatically become a member of the association. That membership comes with both rights and responsibilities, and it helps to know how the pieces fit together.
The board is the decision-making arm of the association. Board members are unit owners who volunteer their time (it's usually unpaid) to handle everything from approving the annual budget to hiring landscaping crews. Boards typically have a president, vice president, treasurer, and secretary. At AmeriSave, we often see home buyers overlook the importance of who sits on that board. But the quality of your board can affect your monthly costs, your property value, and your overall experience living in the building.
Some associations are self-managed, meaning the board handles everything internally. Others hire a professional management company. According to the Foundation for Community Association Research, roughly 60,000 to 65,000 community managers and 9,000 to 10,000 management companies support associations across the country, while around 30% to 40% of associations remain entirely self-managed.
Every condo association is governed by a set of legal documents. The most important one is the declaration of condominium, sometimes called the master deed. This document establishes the legal framework for the association and defines what counts as a unit, what counts as common area, and how ownership interests are divided.
On top of the declaration, you'll find the CC&Rs (covenants, conditions, and restrictions). These are the specific rules that every owner agrees to follow. CC&Rs are recorded in the property deed, which means they're legally binding. They spell out everything from noise policies to pet restrictions to what color you can paint your front door. You'll also receive the association's bylaws, which describe how the board operates, how elections work, and how meetings are conducted.
Condo rules vary from one building to the next, but certain themes come up again and again. Noise restrictions are common, especially in multi-story buildings where sound travels between floors. Many associations set quiet hours, typically from 10 p.m. to 8 a.m. Pet policies are another big one. Some associations ban certain breeds or set weight limits. Others cap the number of animals per unit.
Renovation restrictions also come with the territory. You might be free to redesign your kitchen, but any work that affects plumbing, electrical, or structural elements typically requires board approval first. Garbage disposal rules, parking assignments, and short-term rental policies round out the most common regulations. It's worth noting that some older CC&Rs contain provisions that are now illegal under fair housing laws. Restrictions based on race, gender, religion, or familial status are unenforceable under the Fair Housing Act, regardless of what the written documents say.
Here's where the rubber meets the road. If you own a condo, you'll pay monthly fees to the association. These fees fund the building's operating expenses, its reserve account, and its insurance policies. How much you'll pay depends on where you live, the age and size of your building, and the amenities available.
According to the U.S. Census Bureau's American Community Survey, about 21.6 million U.S. households paid either a condo or HOA fee, with a national median of $135 per month. That said, fees vary enormously by region. The median monthly fee in New York state was $739, while in Washington, D.C., it was $505 and in Hawaii it hit $470. At AmeriSave, we encourage buyers to factor these fees into their total monthly housing cost from the very start so there are no surprises down the line.
The operating fund is the association's checking account. It covers day-to-day expenses like landscaping, cleaning, elevator maintenance, trash removal, and utility bills for common areas. Think of your monthly fee contribution to this fund as the equivalent of what you'd spend on upkeep if you owned a single-family home. The difference is that those costs are shared among all unit owners instead of landing on one person's shoulders.
The reserve fund is the association's savings account. A portion of your monthly fee gets set aside here to cover major repairs and replacements down the road. Roof replacements, elevator overhauls, and parking structure repairs can cost hundreds of thousands of dollars. Without a healthy reserve fund, the association would have to hit owners with large special assessments or take out loans to cover those costs.
Both Fannie Mae and Freddie Mac require condo associations to allocate a minimum of 10% of their total annual budgeted assessment income to reserves. If an association falls short of that benchmark, it can affect the ability of buyers to get conventional mortgage financing for units in the building.
A special assessment is the charge nobody wants to see. It's an additional, unplanned fee that the association levies when a big expense pops up and the reserve fund can't cover it. Maybe the building needs emergency plumbing work, or the insurance premiums spike after a major claim. The board will vote on the assessment, and once it's approved, every owner has to pay their share.
Special assessments can come as a lump sum or be spread over several months as an add-on to your regular fees. Refusing to pay can lead to serious consequences. The association can restrict your access to amenities, charge late fees, place a lien on your unit, or in extreme cases, pursue foreclosure.
Say you're looking at a condo listed at $300,000 in Louisville, Kentucky. The association charges $350 per month in fees. Of that $350, roughly $245 goes to the operating fund and $105 goes to reserves (a 30% reserve allocation, which is above the Fannie Mae minimum). Over a year, you'd pay $4,200 in fees. That's on top of your mortgage payment.
Now, if you're financing the purchase with a 30-year fixed mortgage at 6.75% and putting 10% down, your loan amount is $270,000. Your principal and interest payment comes to about $1,751 per month. Add $350 in condo fees, roughly $250 for property taxes, and $75 for your unit's condo insurance policy, and your total monthly housing cost is around $2,426. That's the number AmeriSave wants you to look at when budgeting. Not just the mortgage payment, but the whole picture.
People mix these up constantly, and it's easy to see why. Both involve monthly fees. Both have boards and rules. But the underlying ownership structure is different, and that difference matters when it comes to your mortgage and your responsibilities.
In a condo association, you own the interior of your unit and share ownership of the common elements with every other unit owner. The hallways, the roof, the parking garage, the pool? Those are collectively owned by everyone. The association manages those shared spaces and everyone pays into the fund that maintains them.
In a homeowners association, you own your property and the land it sits on. The HOA is typically a separate legal entity, sometimes created by the original developer. It manages shared amenities like a clubhouse or community park, but individual homeowners don't have a shared ownership interest in those spaces the way condo owners do. HOAs are more common in single-family home neighborhoods and planned developments.
The financial implications differ, too. Condo fees tend to be higher than HOA fees because they cover building-wide costs like roof maintenance, exterior repairs, and shared utilities. The Census Bureau data shows the national median for all condo and HOA fees combined is $135, but pure condo fees typically run between $300 and $400 per month nationally. AmeriSave can help you understand how these costs factor into your loan qualification and monthly budget.
Insurance in a condo setting works differently than it does for a traditional house. There are two layers of coverage, and you need to understand both.
The condo association carries a master insurance policy that covers the building's structure, common areas, and shared liability. This typically includes the roof, exterior walls, lobbies, elevators, pools, and any other shared amenities. It also provides liability coverage in case someone is injured in a common area. The premiums for this policy are paid out of the association's operating fund, which means every owner contributes through their monthly fees.
As an individual unit owner, you'll also need your own condo insurance policy, often called an HO-6 policy. This covers the interior of your unit, your personal belongings, any improvements you've made, and your personal liability. Some master policies cover everything from the exterior walls inward (called "all-in" coverage), while others only cover the bare structure ("bare walls" coverage). The type of master policy your association carries determines how much interior coverage you need to buy on your own. Ask your insurance agent to review the association's master policy so there's no gap in coverage.
Insurance costs have been a growing pressure point for condo associations across the country. Premiums have risen sharply in recent years, particularly in states like Florida, Louisiana, and Texas where natural disaster risk is high. When the association's insurance costs go up, those increases get passed along to owners through higher monthly fees. Some buildings in high-risk areas have seen condo fees jump by 8% or more in a single year just to cover insurance increases alone.
This is the part that catches a lot of buyers off guard. The financial health of your condo association can affect whether a lender will approve your mortgage. When you apply for a condo loan, the lender doesn't just evaluate you. They also evaluate the association.
For conventional loans backed by Fannie Mae or Freddie Mac, the association must meet specific requirements. The budget needs to allocate at least 10% of assessment income to reserves. No more than 15% of unit owners can be more than 60 days late on their fees. The building can't have any unresolved safety or structural issues. If the association fails these checks, the condo is considered "non-warrantable," and conventional financing may not be available.
FHA loans come with their own set of requirements. According to HUD, the condo project must either be FHA-approved or qualify under the Single-Unit Approval process. At least 50% of units must be owner-occupied, no more than 15% can be delinquent on dues, and the association must allocate at least 10% of its budget to reserves. FHA approval is valid for three years, after which the association must recertify. Only an estimated 6.5% of the roughly 150,000 condo projects in the country are currently FHA-approved, so this can narrow your options if you're using an FHA loan.
AmeriSave offers a range of loan products for condo buyers, and the team can help you figure out which financing options are available for the specific condo you're considering. Getting that sorted out early saves a lot of headaches later in the process.
Before you buy a condo, look through the association's records. These are the questions that will give you the most information about what you're getting into.
Ask for the most recent study of the reserve. This report tells you what big repairs are coming up and if the association has enough money saved to pay for them. If the reserve fund doesn't have enough money, you can expect either a fee increase or a special assessment in the future. Ask if there are any special assessments that are still open or have just happened. A building that just charged $10,000 per unit for roof repairs is a sign of how well it plans for the future.
Look over the minutes from the last two years of meetings. These let you see what problems the board is working on, how decisions are made, and if owners are complaining about the same things over and over. Also, look at the rate of delinquency.
If a lot of owners aren't paying their fees, the association might have trouble paying for basic things. Find out if the condo meets Fannie Mae and Freddie Mac's requirements for a loan and if it is FHA-approved. Your financing options get smaller if it's not either. Lastly, read the CC&Rs from front to back. Not just the best parts. The whole paper. You should know about any rules that would stop you from renting your unit or having pets before closing day. Not after.
Another thing that doesn't come up enough is to ask what percentage of the units are rented versus owned. A building where most of the units are owned by investors and rented out may have different priorities than one where most of the units are owned by people who live there. This ratio is important to lenders as well. Fannie Mae and the FHA both have minimum owner-occupancy levels that the project must meet in order to be eligible for financing. If the owner-occupancy rate is low, the condo may not be able to get a mortgage, which limits buyers' options later on.
You don't have to take care of all the shared responsibilities of condo living on your own because a condo association does it for you. It collects fees, keeps the building in good shape, makes sure everyone follows the rules, and protects everyone's property values. But it also adds a level of cost and management that you won't find when you buy a regular single-family home. Before you buy, it's smart to learn about the association's finances, rules, and insurance. AmeriSave can help you look into your financing options and find a loan that fits your budget if living in a condo sounds like the right thing for you.
Condo association fees usually pay for things like landscaping, trash removal, building insurance, and the upkeep of shared spaces. They also help build up the reserve fund for big repairs that will need to be made in the future.
The exact breakdown depends on how old and well-equipped your building is. A high-rise with a pool, gym, and doorman will cost more than a low-rise with simple landscaping. The U.S. Census Bureau says that the average condo and HOA fee in the country was $135 per month. When looking for a condo, AmeriSave's mortgage calculators can help you include these costs in your monthly budget.
The average condo fee in the U.S. is $135 per month, but the average fee for a condo is between $300 and $400. In big cities, luxury buildings can cost more than $1,000 a month.
The biggest variable is where it is. The median in New York state is $739, followed by Washington, D.C., at $505 and Hawaii at $470. The number changes based on the building's age, size, and amenities. Before you buy, ask the association to explain how your fees are used. With AmeriSave's prequalification tool, you can see how condo fees affect how much you can buy.
Yes, in most cases. The board of directors usually has the power to approve yearly budget increases that have a direct effect on monthly fees. But a lot of states limit how much fees can go up without a vote from all the owners.
For instance, Illinois says that property taxes can't go up more than 15% a year without the owner's permission. A community vote is often needed for big increases or special assessments. Always read the rules of the association and the laws of your state about condominiums to make sure you know what they are. AmeriSave's Resource Center talks about important things to know about owning a condo and the costs that come with it.
If you don't pay, you could get late fees, lose access to amenities, have a lien put on your unit, or even lose your home. The association has the right to collect fees that haven't been paid.
Most associations will work with owners who talk to them about money problems, but if you don't pay your fees at all, you could lose your property. If you have a lien on your unit, you won't be able to sell it or refinance it until the debt is paid off. If you're having trouble paying for your housing, AmeriSave's refinancing options might help you lower your monthly mortgage payment, which will free up money for other bills.
The main difference is who owns it. People who own condos share ownership of things like the roof, hallways, and pool. In a HOA, each owner only owns their own property and land. They don't share ownership of common areas.
This difference in ownership affects fees, insurance, and who is responsible for maintenance. Condo fees are usually higher because they pay for the upkeep of shared parts of the building. Single-family home developments are more likely to have HOA fees, which pay for things like parks and community centers. You can customize AmeriSave's home loan options to fit either type of community.
Yes. Before giving you a mortgage, lenders look at the condo association's finances, reserve fund, delinquency rates, and insurance coverage. If your association is in bad financial shape, you might not be able to get a regular or FHA loan.
Fannie Mae and Freddie Mac say that at least 10% of assessment income must go to reserves and no more than 15% of owners can be behind on their dues. FHA-backed loans can only be used for condos that are on HUD's approved list or that meet the requirements for single-unit approval. The AmeriSave team can help you find out what loan programs are available for the condo you want.
When a big, unexpected cost comes up that the reserve fund can't cover, the condo association charges a special assessment. You pay this in addition to your regular monthly fees. You can pay it all at once or in several payments.
Some common reasons are having to fix a roof in an emergency, having major plumbing problems, or having your insurance premiums go up. Once passed, assessments are legally binding and need board approval. Before you buy a condo, find out if any special assessments are due or have recently been charged. The AmeriSave Resource Center has more information on what to look for when you look over a condo's financial documents.
You can find FHA-approved condo projects on the HUD website at HUD.gov. To find out if the project is still approved, type in the state, county, and condo name.
Right now, only about 6.5% of the 150,000 condo projects that are expected to be built in the U.S. are FHA-approved. If your condo isn't on the list, it might still qualify for FHA's Single-Unit Approval process if it has at least five units. Based on the approval status of the condo and your financial situation, AmeriSave can help you figure out what loan options you have.
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