Before buying into a homeowner’s or condo association in Chicago, it’s essential to understand the full cost of living in the community. One monthly expense that should not be forgotten is HOA fees. While fees will vary depending on the HOA’s amenities, the building’s location, age, and other factors, the average HOA fees in Chicago are a few hundred dollars.
How Much are Average HOA Fees in Chicago?
Condominiums are known for maintaining shared spaces and facilities, securing the funds necessary from unit owners. Owners are obligated to pay condo fees, which they agree to when they first purchase the unit.
Condo fees, also known as HOA dues, can vary from one association to another. The cost will ultimately depend on the association’s needs, amenities, and even geographical location. Fees and assessments help cover the cost of shared property and amenities, so the more amenities an HOA has to offer and the better its location, the higher the fees will be.
That said, in Chicago, average condo fees fall somewhere between $300 and $600 a month.
HOAs work similarly in that they maintain common areas and provide services. The only difference is the structure of ownership, as HOAs typically feature single-family homes. Chicago HOA fees generally average between $300 and $400.
Why are Condo Fees Higher Than HOA Fees?
While condos and HOAs share many similarities, fees tend to be higher for condo associations. This is due to several reasons:
- Maintenance. Condos have more maintenance responsibilities, as they own more common elements. In HOAs, individual owners are only obligated to maintain their private lots, leaving the association to maintain common areas. In COAs, the association must cover the building’s roof, siding, hallways, elevators, stairwells, lobbies, and more.
- Staffing. It takes more people to keep condominiums running compared to single-family communities.
- Utilities. Condo fees frequently cover utilities, such as water, sewer, and trash.
- Insurance. Since condo insurance is more comprehensive, it’s also typically more expensive.
- Reserve Funds. Average HOA fees tend to be lower than their condo counterparts because the latter require more substantial reserves. This is due to the fact that condos are responsible for more shared elements and components.
Who Determines Condo HOA Fees?
Annual HOA fees are set by the condo association’s board. The board calculates each owner’s assessment amount for the upcoming year based on the annual budget. The biggest factors the board uses in establishing the following year’s budget are the HOA’s projected operating expenses and the amount it needs to maintain in its reserves.
For most HOAs, the primary income source is through homeowner dues. To determine fees, board members take all their expenses and divide them proportionally among unit owners. The resulting amount is the HOA fee.
What do HOA Dues Cover?
Association fees cover the costs of maintaining and improving common areas of the community and its amenities. Examples of those expenses include:
- Landscaping and seasonal property expenses
- Common area maintenance
- Insurance premiums
- Shared amenities such as the pool, fitness center, parking lot, and other amenities
- Common area utility and energy expenses
- Funding the reserve budget
Condo associations must budget for current and future repairs, maintenance, and capital improvement projects, and the way they fund these items is through HOA fees.
Owners who have questions or concerns about their association’s fees should contact the board and review the HOA’s financial documents, budget, and reserve study. Illinois condo board members are required to act as fiduciaries and make decisions based on the best interests of the entire community.
Can the Board Raise Average HOA Fees?
Yes, the HOA or condo board can raise fees to meet the needs of the association. That said, the board can’t just make a guess as to how much the community will need. Any increases must be based on sound judgment, due diligence, and due process.
In Illinois, the Condominium Property Act allows unit owners to challenge an increase if it exceeds 15 percent of the previous year’s total dues (765 ILCS 605/18). To do that, owners holding 20 percent of the votes must submit a written petition within 21 days of the board’s decision.
If that happens, the board must hold a meeting of the unit owners within 30 days to review the budget or fee. At the meeting, the budget or condo fee remains valid unless a majority of all owners vote to reject it.
Unit owners who find that their average condo association fees are unreasonably higher than before should approach the board or manager for clarification.
What Drives Costs in a Condo HOA?
Fee increases may not be popular, but more often than not, complaints stem from a lack of understanding. Board members should educate owners about what drives fees up or down.
Why Dues Increase
There are a number of factors that can influence dues increases, including but not limited to:
- Rising Labor or Material Costs. When wages and the cost of goods spike, condo associations must respond by raising dues to meet staffing and other needs.
- High Vendor Prices. To stay in the green, vendors often raise their prices to keep up with inflation, causing associations to pay more.
- Rising Insurance Premiums. If the association is exposed to greater risk, carriers typically raise deductibles or premiums. For example, if forest fires become more common, COAs should expect to pay more for this type of coverage.
- High Delinquency Rates. When all owners pay on time, the association can meet its financial needs. Conversely, if a lot of owners default on their dues, the board would need to raise them the following month to cover expenses.
- Underfunded Reserves. Reserves play an essential role in long-term stability and safety, especially for condominiums. When reserves are insufficient, the condo can’t pay for major repairs and replacements. Raising dues is often necessary to meet reserve needs quickly.
Why Dues Decrease
While condo fees rarely decrease, it remains a possibility. Boards can lower dues by:
- Cost-Cutting. Temporarily cutting back on non-essential costs can result in lower dues for owners.
- Asking for Service Discounts. Sometimes, if the association has an established relationship with a vendor, boards can request service or bulk discounts.
- Using More Aggressive Collection Efforts. Unpaid dues can disrupt the association’s operations. Referring delinquent accounts to a collection agency, taking legal action, placing liens, and initiating foreclosure can help settle outstanding balances.
- Streamlining Operations. Investing in management software or hiring a professional company can streamline processes and cut back on administrative costs.
What Counts as an Unreasonable Increase in Typical HOA Fees?
An unreasonable increase refers to a dues increase that is excessive or unjustified. If the board fails to clearly explain the reason behind the increase, owners may challenge it. Any increases must align with the approved budget and reserve study.
Additionally, imposing average condo HOA fees must follow proper procedures. This usually means providing adequate notice and holding a meeting. Depending on state laws and the governing documents, increases over a certain threshold may even require a membership vote.
That said, large increases are not always improper. In some situations, they are necessary. Underfunded reserves and deferred maintenance are good examples. Board members must do what’s best for the community, and that sometimes means raising dues by a significant amount.
Understanding Average HOA Fees
Understanding how dues work is essential to responsible financial management. The average HOA fees in Chicago should always reflect the association’s actual operating costs and reserve funding needs. To achieve this, boards must rely on accurate budgets, reserve studies, and financial reports.
To learn more about condo association management in the greater Chicago area, please contact us at First Community Management.