Are the common charges too high?
First ask what the budget is buying.

The short answer

Common charges are too high when the service and capital plan do not justify them relative to credible alternatives—or when the buyer will not use what they fund. A low charge can be more dangerous if it depends on subsidy, deferred maintenance or inadequate reserves.

Compare scope before amount. Two buildings with identical charges may provide different staff, heat, amenities, utilities, reserve funding and commercial support. Two units in the same building may also carry different common interests.

The buyer’s decision framework

Read the expense mix

Obtain the current budget, prior-year actuals and year-to-date variance. Rank payroll and benefits, insurance, utilities, repairs, management and amenity expenses. A rising line may be rational; the buyer needs to know whether it is structural, temporary or offset elsewhere.

Separate common charges from property taxes, mandatory club or service fees, assessments, utilities and owner-paid insurance. Marketing pages frequently omit part of the recurring ledger.

Build an apples-to-apples comparison

Compare annual recurring cost per usable interior square foot and per bedroom, but also score service hours, staff count, pool or spa, elevators, exterior complexity, commercial space and reserve contribution. Use completed buildings with similar scale and service—not every nearby condo.

Then test the target unit’s common-interest allocation. Larger terraces, staff suites, storage or parking may carry separate charges. A low allocation can be favorable but should reconcile with the declaration and expense responsibility.

Stress the next five years

Model payroll, insurance, utilities and contracts at higher growth rates. Add known façade, roof, elevator, pool and mechanical work. Determine whether reserves and planned contributions can absorb the schedule without debt or assessment.

Review board minutes and arrears. A charge is only sustainable if owners pay it and the building maintains the property. For new development, identify sponsor subsidy, waived charges and the point when sold owners bear full operations.

1. Reconstruct the full recurring ledger.
2. Compare budget with actual results.
3. Normalize against similar operating models.
4. Review common-interest allocation.
5. Stress major expense lines and capital projects.
6. Translate the result into offer price and resale risk.

Normalize the budget before comparing a monthly number

Put the target and each comparable building into the same operating template. Use annual assessment income as the denominator, then separate payroll and benefits, insurance, utilities, management, repairs, contracts, amenities, debt service and the contribution to replacement reserves. Reconcile budget to the latest full-year actual and year-to-date results. A per-square-foot figure is useful only after each building includes the same categories.

Fannie Mae’s current Full Review is a helpful lender screen: it calls for an adequate budget and generally at least a 10% replacement-reserve allocation measured against annual budgeted assessment income, subject to its stated reserve-study framework and exclusions. That is not a promise that 10% is economically adequate, a mandate for every cash purchase or a substitute for engineering. A new façade, pool or complex mechanical plant can require much more; a current reserve study can identify the building-specific amount.

Calculate two variances for every major line: actual minus budget in dollars, and that difference as a percentage of budget. Then determine whether the variance repeats. Insurance renewed 22% above plan is structural until proven otherwise; a one-time legal bill is different. Reconcile the bottom line to cash, receivables and payables so favorable accounting variance is not mistaken for available liquidity.

For sponsor-controlled buildings, build a stabilized budget from executed contracts, actual headcount and occupied-building consumption. Identify free or underpriced management, waived amenity fees, commercial contributions and sponsor-paid deficits, plus the date each ends. The offer decision should compare today’s charge, stabilized recurring charge and a capital-stress case. A low advertised number is valuable only when all three survive the same test.

Worked example

Building A charges $2.25 per interior square foot each month and contributes meaningfully to reserves; Building B charges $1.85 but excludes a mandatory $250 service fee and budgets little for capital. On a 1,500-square-foot apartment, A is $40,500 annually. B appears to be $33,300, but becomes $36,300 after the service fee before any assessment risk.

If B then needs a $30,000 unit assessment during a five-year hold, its apparent monthly advantage disappears. The example does not prove higher charges are better; it shows why operating scope, reserves and capital timing must accompany the ratio.

Build the decision file

The common-charge file should connect the unit ledger to the building budget, actual results and capital plan. A single monthly number cannot show whether the building is efficient, subsidized or underfunded.

Documents and evidence to collect

• Current unit ledger and common-interest schedule, including charges for storage, parking, staff suites or limited common elements.
• Three years of audited financials where available, current budget, year-to-date variance, arrears and cash-flow detail.
• Reserve balance and study, capital schedule, assessments, debt, insurance, payroll and major vendor contracts.
• Sponsor subsidy, waived charges, commercial contribution, related-party agreement and timing of normalized billing.
• Comparable budgets from buildings with similar scale, staffing, amenities, utilities and service—not merely similar location.

Red flags that require an answer

• Charges are below credible operating cost because reserves, insurance, repairs or full staffing are omitted.
• A sponsor or commercial owner supports the budget temporarily without a clear end date and replacement plan.
• Large adverse variances recur while the board avoids an increase or uses working capital for ordinary deficits.
• The target unit’s allocation is unusually high or low and cannot be reconciled to common interest and benefit.

How the findings should change the deal

High charges can be acceptable when they fund services the buyer values, adequate reserves and disciplined maintenance. Low charges deserve a premium only when actual results and the capital plan show they are sustainable.

Translate a durable annual difference into the buyer’s holding-period economics, but avoid capitalizing the full amount as if expenses never change. Also score the resale effect: future buyers compare the monthly burden visibly.

Frequently asked questions

What is a normal common charge per square foot?

There is no reliable universal number. Building scale, service, amenities, utilities, reserve funding and allocation differ.

Do common charges include property taxes?

Usually condo property taxes are billed separately, but verify the specific ledger and any benefits.

Are high common charges bad for resale?

They can narrow the buyer pool, but well-funded service and capital maintenance may support value. Compare utility and sustainability.

Can charges rise after sponsor sellout?

Yes. Subsidies, warranty periods, staffing ramps and unrealistic projections can change normalized cost.

This guide is educational, not legal, tax, lending, engineering or accounting advice. Use current documents and qualified professionals for the specific transaction.