Q&A: Limit on Fee Raise?

Q I have a question about raising the maintenance fees on a condo. Is there any set limit or percentage? Case in point—our maintenance fee has been the same for 17 years. Now the board of managers has raised it 40 percent. I was paying $307.11 and will now pay $419.43. Is such a jump allowed? Plus, I was not aware of a meeting held where this was discussed. Is the board allowed to implement this change without owners’ approval?

—Less Money in the Bank

A “The board of directors is in charge of the day-to-day management of the co-op. Their authority is far-reaching and broad. Part of that authority is the power to handle finances, including the development of budgets and along with that, raising the maintenance,” says C. Jaye Berger, Esq., a Manhattan-based attorney whose clients include co-ops, condominiums, owners, developers, architects, engineers, interior designers and contractors. “There is no formula that they are required to use and they are not required to keep it within certain limits.

“Having said that, of course, the board is always being mindful of making appropriate and reasonable decisions and not creating a mutiny in the building. There are always elderly people in the building, with fixed incomes, who are greatly affected by such increases, as well as young people with tight budgets. If the maintenance increases, it is probably because it needs to go up based on anticipated expenses. It is possible that extensive renovation work needs to be done in the building and the board foresees the need to raise revenue.

“The real problem with your building is having such a large increase after no increase at all for many years. It does make you wonder about the management of the building. They clearly held off on raising the maintenance until they could no longer do so. One would expect periodic increases every couple of years in order to avoid one very large increase. The size of this increase also makes me concerned about the effect it will have on people wanting to purchase co-ops in the building. A 40 percent increase would make most people a bit apprehensive about what will happen in the future.

“It also makes you wonder about whether alternatives were considered. One common way to raise cash is by refinancing the mortgage. There may be other revenue producing areas in your building that could be used before there is such a large maintenance increase. For example, there may be a real estate tax refund coming to the shareholders. Instead of distributing that money to the shareholders, the board could vote to make an assessment to use that money. That is a less painful way to raise money because it has not yet been returned to the shareholders and into their bank accounts.

“The board does not need shareholder review or approval in order to do this. It can be voted on and agreed to at a regular meeting of the board of directors. There may be discussion at the annual shareholders meeting, but that is more to vent frustration and to influence who may be voted on to the board or not re-elected because of it.”

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4 Comments

  • This question pertains to condos but was answered for coops. Does the same answer apply?
  • Hii, I've been in my little co-op for 7 years now and my maintenance has increased a little over 30% and the board keeps all tax tax refunds. I'm in Riverdale, New York. Would anyone have an idea......just ballpark would be fine......about what the average increase might be for this period. I've lost my job and, while my maintenance is pretty decent for NYC standards, I just can't afford any increases so I'm planning on talking to the board and finding out just where this money is going. I'd love to have some sort of ammunition for that conversation. Thanks so much.
  • In my Condo the fee has been the same for 5 years. They are increasing now 100%, duplicating the fee. Is that reasonable? We now that the bulding needs some urgent repairs . I understand that a Special assessment is what is recommended. They are proposing instead a permanent fee . What is your opinion about this?
  • I owe a condo in New Jersey. In a past five years our maintenance fees increased by 50%. In the past year the fees went up from $538 to $648. Plus we payed a one time assessment fee of 1600 in December. Now, one if the people on board who apparently owes three units in a building is proposing to charge each owner of 250 units $40,000-$50,000 and saying that if anyone can not afford it to get a loan or sell their unit! Is this legal? And how can we put a stop to such drastic increase in a maintenance fees?