Going Up and Not Coming Down

Deregulation and higher fuel prices are leading to the increases in utility bills. Bupp said utilities are especially an issue for condominium associations that don't have individually metered units, meaning the association has to pay all the utilities for the building. Some of CVI's buildings are luckier than most with utility costs: In spring 2005, the company locked in rates for utilities through 2007, he said, causing fees to go up an average of about 15 percent, or $45 a month -- more than $500 a year. But those increases aren't as bad as if CVI had not locked in a contract; while the prices set in the contract may have seemed high a year ago, "compared with today, it's a huge bargain," he said.

As for insurance, "it's been a hard market since September 11," Allardyce said, especially in higher-risk markets such as Washington.

While Simons of Cross Fox was accused of kicking people out of their homes, some local property managers and residents say they haven't seen fee increases cause people to sell. "Very frankly, I've heard talk about that here for the first time," said Karson of 1510 Condos, but he attributed it to anxiety-induced grumbling more than reality.

Frank Rathbun of the Community Associations Institute in Alexandria said that according to a recent study, "bottom line was roughly 80 percent said they were happy with their assessments." Those include condos, co-ops and neighborhoods governed by associations. Owners' level of happiness, Rathbun said, "probably depends more often than not on what people perceive they're getting."

According to the American Housing Survey, done by the Census Bureau for the Housing and Urban Development Department, the median condo and co-op fee nationwide was $178 a month in 2003.

Real estate agents and building managers say fees can affect the decisions of people looking to buy.

"There's a tendency for some people to shop condo association fees as well as condo prices," said Walter Molony of the National Association of Realtors. But, he said, buyers shouldn't choose a condo based solely on whether it has the lowest fees because the association might not be in good financial position. If a condo association is lacking reserves for bigger-ticket items or hasn't kept up with maintenance, it could mean a big increase in fees or a one-time special assessment.

In general, while potential buyers might get a look at an association's bylaws while shopping around, they won't have a legal chance to review the financial documents, such as an association's budget and reserve information, until a contract is on the table. In both the District and Virginia, the law requires that would-be condo buyers have three days after signing a contract to review the association's numbers. The limit in Maryland is seven days.

Buyers should make sure their representative knows how to review condo association financial documents. "People don't focus enough on fee issues," Molony said.

There's a lot to focus on beyond price; financial documents will generally have information on reserves, a reserve study if one has been done and the association's budget and audited financial statement. Reserves are the amount of money an association has put aside to pay for major maintenance on such predictable items as roofs and elevators. A reserve study, usually performed with the aid of an engineer, is done to determine when such maintenance is likely to be needed and how much it should cost.

Heather Field, a community manager with Frederick-based Property Management People, said her company recommends reserve studies be updated for condo associations more often than for homeowners associations, maybe every two to three years.

Allardyce said she thinks most people don't read the financial documents. "I hate to say it, but . . . it's about a two- to three-inch pile of paper," she said. "People just don't take the time."

Welch, the real estate agent, said people do cancel sales after seeing condo associations' financial documents. However, he said, under D.C. rules they don't have to disclose why they decide not to buy, so it's hard to know why a sale was canceled and how much an association's financial situation had to do with it.