The Washington DC Condo Guide Part II
What you need to know before you buy: Association Fees | Part II Of A Five-Part Series
🧰 This is Part II of my five-part series on Washington DC condos. Part II covers monthly association fees—what they cover, how often they should increase, how high fees can depress unit values, and what happens when association fees fall short and special assessments are needed.
This article was originally published as part of my 🛠️Tools series at realestateinthedistrict.com. It’s been updated and expanded here on my Substack, DC Real Estate Channel.
You can find links for the full series archive at the bottom of each post.
Part II: Association Fees
What Is An Association Fee?
All Washington DC condominiums assess a monthly fee to cover maintenance, operation and administrative costs. These fees are often referred to as “condo dues” because they’re assessed to every member of an association. Condo dues typically take the form of a monthly payment, the amount of which is based on the square footage of the home, plus any limited common elements assigned to the unit (such as a parking space or storage unit).
Tell Me What Condo Dues Cover In 20 Seconds
Association dues in the District are different for each condominium, but primarily cover:
Common area maintenance (exterior structure, grounds, upkeep of lobby and other common areas, common area furnishings, interior hallways, elevators and stairways, trash facilities, trash collection, garage maintenance, and amenity area & equipment upkeep);
Mechanical maintenance, repair and replacement (electrical, plumbing, heating and cooling for common areas);
Roof and gutter maintenance;
Staff (such as maintenance staff, concierge, security staff, etc.);
Management (on-site or off-site);
Services;
Master Insurance Policy (covers the common areas of the condominium);
Legal retainers and fees.
Think of association dues as shared costs for property operation and maintenance that single family homeowners pay individually, some of which aren’t realistic (concierge, maintenance crew) in non-multifamily residential settings.
Zuzu Notes:
Larger DC condominium projects typically include water, sewer, trash and snow removal as part of covered items in condo dues.
Some condominiums may include water or other utilities, especially those with common laundry facilities.
How Often Should Condo Dues Increase, and by what percentage?
Most experts recommend an annual increase for condominium dues so that the association’s reserves can meet demands of inflation and cover rising costs associated with wear and tear on buildings, equipment and cosmetic features.
The recommended increase varies between 3-5%, depending on the association’s budget, reserves, repair and replacement needs, etc.
Here's what associations generally take into account:
Inflation: Annual ‘cost of living’ increases on existing services, goods and staff
Future Projects: Setting aside funds for upcoming improvements and upgrades, and/or addition of amenities such as a sports court or fitness center
Required Minimum Reserves: GSE (government-sponsored enterprises) FNMA (Fannie Mae) and FHLMC (Freddie Mac) set the standards lenders must follow to ensure the loans they sell to them are eligible for purchase. One of these standards is the requirement for condominiums to maintain a minimum level of reserves—sufficient to cover the costs of repairing and replacing major capital items as they approach the end of their life expectancy. Fannie Mae updated its guidelines in August 2023, requiring appraisers to place addded focus on safety features and infrastructure, examining significant deferred maintenance, as well special assessments and condominium loans. The Condominium Act also outlines reserve requirements, which can vary by geographical location.
Here are the advantages of a well-funded association:
✅ Eliminates Deferred Maintenance:
Associations that are financially stable have the ability to proactively address maintenance issues that would otherwise escalate and become more expensive and damaging.
✅ Helps Prevent Special Assessments:
Sufficient reserves are key to an association’s overall financial stability and ability to cover unexpected or major repair costs. Without adequate reserves, special assessments might be required to keep the condominium operational and in good repair. Special assessments can be a substantial financial burden on residents and a hinderance to resale.
✅ Complies With Lender And Jurisdictional Requirements:
Many lenders and underwriting guidelines require an adequate level of reserves for condominium projects to be eligible for financing.
In addition, some states have statutory requirements for reserve studies. The District of Columbia and Maryland do not have statutory guidance or a statutory requirement for a reserve study. Maryland does have a reserve funding requirement. Virginia has statutory guidance for reserves, but not a statutory requirement.
✅ Enhances Property Value:
Home buyers and lenders are reassured of a condominium’s value when the association is circumspect about finances, commissions reserve studies, and ensures that the reserve fund is adequate for its needs, both present and future. This contributes to the property’s value and reputation.
What Happens When Monthly Dues Get Too High?
If you’ve ever seen a listing for a 500 square foot condo with a $900 monthly fee, you’ve asked yourself; “What went wrong here?”
Since fees escalate annually—or should—it stands to reason that long-established condominiums will have unit fees far exceeding those of brand new condominiums and those with elements still under warranty.
At some point, however, it’s difficult to build value to buyers on the resale market when the monthly association fee equals or exceeds the monthly mortgage payment for a unit. Typically, this results in unit values dropping. The home is worth less because the operation costs are so high—-and while mortgage interest may be tax deductible, condo fees for owner-occupied units generally are not.
When you’re shopping for a condominium, it’s important to look at fees, the age and condition of the property, budget, reserve study and other documentation included in the association documents in addition to sales price. You may find that what initially seemed like a bargain is actually a poor investment.
Explain Special Assessments
If an association is underfunded and a major, unexpected repair surfaces, a special assessment may be needed to offset the cost.
The dreaded phrase “special assessment” can inflict considerable trauma on condo owners, and serve as a red flag to buyers. They are the additional fees levied on unit owners by a condo association when reserves don’t cover a major issue.
Special assessments may become necessary when:
Major emergency repairs crop up unexpectedly, or become urgent due to deferred maintenance. Examples include roof failure or damage, structural issues, Plumbing failures, HVAC or electrical failures.
Large-scale capital projects that exceed reserves are necessary. Examples can include updating aging infrastructure, replacing swimming pools, rebuilding balconies and terraces.
Legal or regulatory compliance. Examples include lawsuits against the association, settlements, fines, etc.
While condo associations secure Master Insurance Policies insurance for common areas, when policy caps are exceeded, costs fall to the unit owners.
Some condo insurance policies offer optional "loss assessment coverage" to help with special assessment costs.
Who Decides If A Special Assessment Is Needed?
The condo board.
How Does Assessment Work?
The assessment is levied against all units, and the amount per unit is typically determined by the percentage of ownership in the building (which is often based on square footage).
Governing documents such as the CC&Rs (Covenants, Conditions and Restrictions) outline the procedures for levying special assessments and may include limitations or voting requirements. In some states, laws regulate special assessments.
Payment of special assessments is typically made in a single lump sum or via an installment plan.
What Is A ‘Capital Contribution’?
It’s a one-time, up-front fee, usually equal to two or three months’ condo dues, for joining the association. Capital contributions are not credited towards condo dues. Every new unit member pays them as part of their closing costs at the time of purchase.
Also known as transfer or initiation fees, capital contributions are deposited into the association’s reserve fund to help cover costs of major repairs, replacements, and additions to common areas and amenities.
Part III Preview:
In the third part of this series we’ll discuss financing for District of Columbia condominiums.
📬 Want personal guidance or have questions about multifamily home types in the District? Reply here or schedule a consult. I’ll help you decode it all!
🧠 Series Archive
The Washington DC Condominium Guide
An in-depth series for Washington DC buyers navigating condo purchases.
📚 Parts 1 - 5
👉 Part 1: Condo Basics
What is a condominium? How does condo ownership work? Why buy a DC condo?
👉 Part 2: What Does The Monthly Fee Cover?
Does the monthly association fee seem high? What does it cover, exactly? What’s a Capital Contribution? Breaking down the monthly cost of condominium ownership.
👉 Part 3: Financing a DC Condo
Learn about condo financing options, what conditions make financing difficult or impossible and Zuzu’s little contract clause that protects buyers’ earnest money deposits if a building is unwarrantable.
👉 Part 4: Condo Resale Certificate Packages
What are ‘condo docs’? Learn what should be included, what to review and the importance of buyer due diligence. DC’s right-of-rescission explained, the DC Condo Act outlined + legislative updates and links.
👉 Part 5: Condo Q&A
Answers to common questions about purchasing a Washington DC condominium.
🧰 This post is part of a multi-part series originally published as a long-form article in the Tools section of my website, realestateinthedistrict.com.
Each post is being updated for this Substack channel, and optimized for clarity and readability.
The original long-form Tools pages will remain on my website for reference purposes until July 23, 2025.
Disclaimer:
We are not attorneys, legal experts or CPAs. The information presented on this channel is derived from reliable sources, but should not be considered legal, financial or investment advice. Susan Isaacs and Compass, their principals and/or representatives, do not guarantee or warrant its accuracy, completeness, or applicability to any specific transaction. Homebuyers should read applicable D.C. law and code themselves as part of their due diligence, and seek help from licensed, qualified professionals for interpretation and application to their specific transaction.