Homeowner’s Association (HOA)
HOA Fees vs. Common Charges vs. Real Estate Taxes
The differences among the three include:
- Common charges cover more expenses compared to HOA fees because, with individual detached homes, the homeowners are responsible for most of the expenses. But in condominium buildings, all housing units share the premises and are collectively responsible for expenses like an HVAC and new roofs.
- The HOA fee might be directly collected by the association. Common charges are usually collected by the property management company hired by the condo board. The taxes are collected by the city government.
- Both HOA fees and common charges are collected on a monthly basis. Property taxes in NYC are either collected semi-annually or quarterly, and it’s determined by the tax amount: Semi-annually for more than $250,000 in property taxes and quarterly for less than $250,000 in property taxes.
- Neither HOA fees nor condo common charges covers property taxes. That’s something the homeowners have to pay themselves.
- Common charges vary depending upon the size of the condos in the building and the amount of amenities available. Generally speaking, the more amenities and present features of a building (doorman, gym, pool), the higher the common charges will be. HOA fees are usually the same for all residents. Property taxes are calculated based on the property’s assessed value (for most townhouses and brownstones) and rental income (for most co-ops and condos). This results in the latter getting a much higher property tax than comparable brownstones.
- In extreme circumstances, if a homeowner doesn’t pay their HOA fees or common charges for a long time, the HOA or condo board can evict the homeowner, put a lien on the property, and seek foreclosure. If they don’t pay their property taxes, the city puts up their debt for sale (lien sale).