WHEN BANKS NICKEL & DIME YOU

In the past, co-ops and condos weren't aware of certain fees because of complicated rewards programs variously described as "compensating balances," "corresponding credits" or "offsetting credits." Banks would award buildings credits based on how much money the property had on deposit there, used that considerable capital to waive some or all of the banking charges. The dollar amount of the credits were usually based on a benchmark interest rate, such as the yield on 90-day U.S. Treasury bonds. The rewards programs didn't generate actual money, but racked up a dollar amount of credits that could be used to offset fees.

Those fees include such services as managing a "lockbox," which means the bank arranges to receive maintenance checks from residents, process the checks and deliver information on payments to the property manager in a timely manner. Banks can bill as much as $6,000 per property per year for the service, according to property managers. Banks also often charge properties 10 cents apiece for every check they write, which could total thousands of checks a year. Fees for bounced checks are often based on the amount of the check and the period the account is overdrawn.

Pigs at the Fee-ing Trough

For managers, these fees typically appeared on a bill from the bank, only to be wiped away in later pages of the bill with corresponding credits. Since the fees didn't have to be paid in real money, most co-op boards never heard about them.

However, interest rates have fallen to rock-bottom levels — the yield on 90-day Treasuries is now about 0.1 percent. For many buildings, corresponding credits are no longer large enough to wipe out bank fees.

Sandberg, for instance, recently received a bill for $38,000 in bank fees racked up in 2008. Some of the biggest of the 52 buildings he manages had nothing to pay — their fees were all offset by corresponding credits. But several properties with 10 or fewer co-op apartments had to pay more than $600 per building.

The new fees come at a particularly bad time. Over the last two years, the cost of water and access to the sewer system has gone up 26 percent, after years of modest increases of about 5 percent annually. The cost of heating oil has finally leveled off after years of sharp increases — but now property taxes are jumping instead, so that a building that recently owed $600,000 a year might now owe over a million, says Steve Osman, management executive for Metropolitan Pacific Properties.

It's a rough time, and banks are making it worse by becoming more zealous in charging fees. "They didn't used to charge for overdrafts for a couple of days," says Osman. "They used to cut you slack."

Get Ready to Walk

The most effective way to avoid fees seems to be to threaten to leave, and to be willing to walk if necessary. Banks attempted to charge petty fees in past recessions, too, and many property managers responded by threatening to change banks.

"It comes up from time to time," says Alvin Wasserman, director of Fairfield Property Services, which manages 140 properties.

To avoid paying bank fees, Fairfield some years ago moved accounts to a new bank that promised not to charge fees in return for Fairfield's business. However, this year, that same bank attempted to levy fees on the accounts of two Fairfield properties. "We sat down with representatives from the bank," says Wasserman, who managed to have the fees waived on one property in return for transferring assets into the accounts managed by the bank. The case of the other property is still being negotiated.

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