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The Top 8 Ways To Prevent A Condominium Corporation Common Element Fee Increase

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As anyone who lives in a condominium corporation knows, common element fees are part of living in a managed community. Used to fund the condominium’s operations and maintain the community, common element fees are fees all condominium members are legally required to pay. Common element fees  are set by board of directors who, as homeowners, pay them too.

Whatever the reason, a board of directors may, at times, be faced with the difficult decision to raise common element fees. Nobody wants to see that happen, but raising common element fees is often inevitable. At other times, it may be something your board can avoid. Read on to learn the top eight ways to prevent condominium corporation common element fee increase.

1. Go through your supplier and service contracts with a closer eye.

Review your community’s service contracts and confirm your community is getting the services it needs and paying the correct price. Look for:

  • Renewal dates. Contracts with a CPI (Consumer Price Index) clause might result in higher costs.
  • Ineffective or unneeded line-item services
  • Promotions or referral specials
  • Pricing paid sufficiently accommodates services rendered

If you find any discrepancies or are unhappy with the services rendered, talk to your supplier or services provider to see if they can work with you. Also contact the utility companies and ask if they’ve set a price rate schedule for the upcoming year. You might be able to identify greater savings than you previously thought.

2. Optimize your reserve fund.

It’s imperative to check in on your corporation’s reserve fund each year. The reserve fund is money set aside by a condominium corporation for additions to major components the corporation is obligated to maintain and future replacements and repairs that don't occur annually.

A healthy reserve balance ensures you can take care of needed repair and replacement projects, but it can do much more. Because interest rates fluctuate, review your return on interest and connect with your reserves banking partner to inquire about any new higher reserve interest-bearing programs. While the return and interest rate offered will vary by bank and depend on account terms and conditions, this may ease some of your community’s financial burden.

3. Consider capital improvement funding.

If you don’t have adequate funds for projects and repairs, you might consider securing a loan or line of credit instead of increasing common element fees. For some, it might be better to borrow now to complete a looming project. By waiting, you allow things to deteriorate and run the risk of increased costs. A capital project funding option can lighten the financial impact on community members yet maintain the beauty and integrity of your community. Additionally, a loan allows:

  • Homeowners to pay their share over time to reduce the immediate impact on their personal finances instead of making one lump-sum payment.
  • Needed repairs or improvements to be completed quickly.
  • Property values to maintain stability by allowing structural problems to be addressed and repaired right away.
  • The cost of common area improvements to be spread over time and assigns the cost of those improvements to the people benefiting from them the most.

Follow your governing documents before moving forward with securing a condominium corporation loan, and consult your community’s attorney and CPA for legal and financial advice.

4. Make sure you’re not overpaying in insurance.

Insurance can be one of the biggest expenses for a community. Because of this, sitting down with your insurance agent and reviewing your policy regularly is essential. While your governing documents may establish a minimum amount for your corporation insurance policy, it’s important to consider additional coverage to thoroughly protect your community. There is no one-size-fits-all approach to condominium insurance, and prices, situations, and needs change, so you may be able to make adjustments or shop around for another insurance agency to reduce spending.  

5. Develop a cost-savings plan.

Develop a comprehensive, multi-year budget and financial plan that takes into account projected expenses, inflation, and community growth. There’s no better way to ensure both dollars and human resources get used wisely than to plan for what’s next. Meet with your community leadership team to assess how inflation and the current economic environment are impacting your operations today and in the future. Then, create a response plan that determines what next steps work best for your community. This plan should act as a roadmap on how the board will pivot to address the current situation and exhibit resilience moving forward. Engage owners for feedback—you might find residents with a financial background have the experience you need to meet your plan’s goals.

6. Collect on past-due payments.

Collection efforts can sometimes be challenging, but this money is crucial to effective operations, and letting even a couple of delinquencies slide by can disrupt your corporation’s entire budget. What’s more, ignoring non-payments can lead to special assessments or legal trouble. To protect your community’s funds, collect common element fees consistently. Here’s how you can keep homeowners accountable:

  • Educate homeowners on what their common element fees are for and why they must pay them.
  • Share the annual budget with homeowners.
  • Regularly monitor assessments—who’s paying, how regularly, and how much.
  • Clearly communicate due dates, due amounts, past-due dates, and past-due amounts.
  • Identify where and how homeowners can access common element fee information.
  • Ensure you assign a person, such as a community manager or treasurer, who homeowners can contact for payment questions or concerns.
  • Enforce collections and payment policies consistently.

7. Leverage Condominium Corporation technology solutions.

Implement cost-effective technology solutions, such as an online payment portal, an operations management platform, community app, and community website. These services help improve efficiency and reduce operational costs. With condominium corporation technology solutions, you’re likely to see savings in:

  • Postage. Instead of sending notifications through the mail, distribute them via an app digitally for free.
  • Printing. Save paper and money by communicating events and updates through email or on your website.
  • Payments. Use an online payment portal to automate owner payments so they avoid late fees and you can stay on top of collection efforts.

8. Collaborate with neighbouring communities for events.

Community events allow residents to connect, enhance a positive environment, and foster a supportive culture. And while they’re essential, funding events can be expensive, and planning can be stressful. For your next event, consider collaborating with your partner community. You may be able to cut costs, gain resources, and increase participation. These types of events lend themselves to joint-hosting opportunities:

  • Garage sales: Hold community-wide garage sales alongside other corporations to take advantage of the influx of people in the area and put more eyes on available homes.
  • Recycling events: Work with a fellow community to set up recycling drop-off centers for old computers, TVs, and other electronics. This will help make each community more eco-friendly, allow residents to declutter their homes, and hopefully increase environmental efforts.

Understanding Condominium Corporation Budgets, Financial Management, and Reserves

A condominium corporation common element fee increase is usually not something a board wants to do. However, projecting and monitoring the financial condition of the community is one of the biggest responsibilities of a board, and raising condominium corporation fees may just be part of the job.