What do condo association fees cover

These policies serve to protect themselves against costly damage or any other incidents that may occur in these shared spaces. Depending on location, your association may also need to get flood insurance to protect it from environmental hazards. What do HOA fees cover, in this case, is the insurance for the community properties only. What is an HOA fee used for, in terms of preparing your community for emergencies? Contingency funds include any money set aside every month to help with unexpected costs.

These costs could include expenses for the community, emergency expenses, or insurance expenses after a major natural disaster. Homeowners associations will also have to pay utilities for any shared buildings like pools, wellness centers, meeting rooms, and clubhouses. Occasionally, homeowners associations can get a bundled deal on Internet and cable services for an entire complex or development. This is a cost that would be part of your association fees, too. What is an HOA fee used for after paying for the community necessities?

The remaining part of it is used to keep the finances of your community safe. Any association that is looking to secure their financial future should be establishing reserve funds. These accounts house funds that are separate from accounts used to pay for everyday expenses. And the HOA might make rules forbidding rental properties.

Neighborhood HOAs also cover common areas, like any parks, recreational facilities, clubhouses, tennis courts, and pools. HOAs would handle services for a neighborhood, such as staff and property management. They might — but not necessarily — also cover city services like trash or snow removal. Kendall Gigax , a top-selling agent in the Toledo, Ohio, area, notes that not all HOAs are active — and that can become an important matter to note when considering a home purchase.

Word to the wise here: If you decide to paint your house purple with yellow polka dots, you may get away with it legally in such a situation, but you may face a lot of social pressure for the decision nevertheless. But for such a low fee, those HOAs may just give very basic guidelines, and maintain only limited common areas, like the entrances and the signs. Your HOA will not cover your own mortgage or your own home; you need your own insurance policy for those.

With most associations, HOA fees cover things like maintenance of the outdoor property and common areas. This includes landscaping, maintenance for swimming pools and gyms, and snow removal. The reason your condo building or estate looks so beautiful is because of the well-maintained common areas.

Your community may have all or some of these amenities and services. But, this is a small price to pay considering how much time and effort it saves you. This is one of many perks that come with living in a planned development. Most communities will and should start building a reserve fund right from the beginning. Your HOA should have a master insurance policy to cover the costs of regular wear and tear and unforeseen damage.

This is separate from the reserve fund and can really come in handy when disasters or emergencies happen.

Your HOA fees also cover utilities like air conditioning, heating, water, lighting and electricity for common areas. Depending on how your community is set up, your fees may also cover utility expenses for individual units. As a result, part of the HOA fees you pay will go towards salaries and other personnel costs. Are there any services for which you have to pay extra? Does the association generate any income?

This could be anything from shared laundry facilities and parking garages to leased retail spaces. If the HOA generates any additional income from an outside source, this can significantly reduce your annual dues How are fee increases implemented, at regular intervals or as needed?

How often do increases occur, and by what percentage? Can the HOA provide a history or rate increases for the last ten years? This is an important tip, as it will give you the opportunity to track the average rate of fee hikes What is the current status of the HOA's reserve fund?

Are any special assessments planned for the immediate future? What is the HOA's history of special assessments? Again this is an important tip. If the HOA has a long history of special assessments it could indicate poor management on the part of the board of directors What is the association's policy when dealing with delinquent homeowners?

If they don't have a suitable policy in place that allows them to enforce the collection of dues, your fees will be increased to cover those losses The answers you get from these questions will give you some valuable data which can be used to make a comparison with similar managed communities in the area. Newer developments and complexes typically offer lower HOA fees as an incentive to sell properties , but they inevitably go up within the first two years.

Another round of major fee hikes may happen 5 or 10 years later. In many cases poor construction work gets put back on the developer in a lawsuit about 5 to 10 years after the property development is complete. HOA dues always increase, and what you are quoted now is only temporary.

To keep up with inflation, the board of directors will have to raise the annual fees. Older buildings and developments are prone to more frequent rate increases, as well as special assessments. Even if the properties have been well maintained, sooner or later major repairs or improvements will have to be made, if only to bring them in line with updated city codes and regulations.

This necessitates a raise in annual fees and may lead to a succession of special assessments. The size of the community has a direct impact on your HOA fees. The greater the number of homeowners, the lower your HOA dues. Also, be especially leery of condos and planned communities with a disproportionate number of vacancies.