Contributed by Bart Whiteman, Realtor®
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In the realm of villa ownership, understanding monthly regime fees is essential for budgeting and financial planning. These fees, which cover various maintenance and amenities, are determined by several factors set by the owners' association and property management company. Let's delve into the intricacies of how these fees are determined and what variables impact their cost.
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All “villas” are legally condominiums, and there is a monthly fee, which generally covers all exterior maintenance, Landscaping, amenities such as pools, trash, removal, pest control, and insurance.
The actual amount is determined by the owners’ association/board of directors (the “Regime”), as well as the property management company that is hired by the board of directors.
There are many variables that determine the amount of the monthly Regime fee, which is then prorated according to the square footage of the respective units within the complex. So, a smaller one bedroom will, of course, have a smaller fee than a two bedroom or three bedroom unit.
One of the biggest variables is how much land needs to be cared for. For example, you might have a complex that has 40 units, all one story, on 15 acres. Conversely, you might have a five-story property with 150 units on 9 acres, so much less land to take care of.
A second variable is how much of the monthly fee will be set aside for capital reserves. Some Regimes want to have a higher monthly fee with a higher amount of that monthly fee, being set aside for periodic large scale, capital, improvement, projects, such as repaving, parking, lots, roofing, etc. That way, when the time comes for such a large scale projects, there are often adequate funds on hand, so there will not be an assessment or, if there is one, it will be relatively small.
Other Regimes would rather keep the monthly fee lower, and have a smaller percentage of the monthly fee being set aside for capital improvements. In this case, when large projects need to be funded, there will not be enough in the capital reserves, and therefore there will be an assessment to the owners which is usually spread over one or two years.
Yet a third factor that is beyond the control of the Regime, but can definitely affect the amount of the monthly fee, is the amount of insurance that is required. For example, an older property on a lower elevation relative to sea level, will have a substantially higher insurance premium than a newer property that is lower risk because of a higher elevation.
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As always, your Realtor® here at Luxury Homes of Hilton Head will work hard to get all and any of questions regarding Regime Fees and more answered for you. So feel free to reach out to us and let us answer any questions you may have!
