Congratulations! You found a home and it’s perfect for your family – just the right size, condition, location and neighborhood to meet your needs. Your new home is part of a homeowners’ association (HOA), so the common areas look beautiful and well-maintained. It even has great amenities, like a clubhouse and fitness center – there goes your last excuse not to get back in shape!
When you buy your home in an HOA community you became part of a common interest development. As a result, you’re required to share the costs of maintaining and operating your community’s common areas, systems equipment and shared amenities – and let’s face it, smooth operations and an inviting appearance go a long way towards enhancing property values. These services are covered by your homeowners’ association fees, which each owner must pay. Payments are paid monthly, annually, semi-annually or quarterly, depending on your community.
HOA fees (also known in some markets as “assessments” or “maintenance fees”) are set by the Board of Directors, who determine each owner’s share based on projected annual expenses. Board members are usually homeowners who live in your community and volunteer to service on your community board. The board members do not profit from HOA fees; they are homeowners just like you and obligated to pay them like all owners.
While you know you must pay a monthly association fee, do you know what this money is used for? Each association has its own unique rules and policies, so it’s important that you read your community’s covenants, conditions and restrictions (CC&Rs) and bylaws to find out the specifics. To get an idea of what your HOA fees may cover – and how they can protect your property values – see this overview below:
Continuous maintainance to common areas, equipment, systems and shared amenities. Depending on your community, this may include:
Your association must purchase a master insurance policy to protect your community’s building structures, exteriors and community property against damage, plus other riders and add-ons as required by your community’s location, property type and other needs. Remember, however, that you this insurance doesn’t replace the need to carry your own homeowner’s policy.
Homeowners associations cover the costs of electricity, lighting, water, heating, air conditioning, etc. for all of the community’s common areas.
Fiscally sound HOAs allocate a portion of their dues to a special long-term reserve account to cover planned and budgeted renovations or repairs that do not occur on a regular basis, like repaving interior roads or replacing elevator machinery. If the reserve fund is not large enough to cover these expenses, your homeowners association will levy a special assessment to make up the difference – an additional fee you must pay.
This money is automatically set aside each month to cover unforeseen community expenses and emergencies.
If your community employs its own management, maintenance and janitorial staffs, a portion of HOA fees is used to cover their salaries and benefits.
To ensure their community’s ongoing operations and financial stability, many homeowners associations enlist the services of professional community association management companies – and their fees are covered by HOA dues. A professional community management company will effectively implement the policies set by the Board and provide full-service management services that add value and enhance residents’ lifestyles.
There is another benefit to living in a common interest community and paying HOA fees – the ability to use and enjoy community amenities you may not be able to purchase and maintain on your own, like a swimming pool, tennis courts or walking trails. In addition, depending on your community, you may no longer have to pay separately for lawn maintenance, snow removal, cable TV, electricity and other services, which can add up.
So while some people may consider HOA fees an unnecessary expense, they’re actually very necessary to enhance your lifestyle and keep your community clean, safe, beautiful and financially stable – and that’s what helps protect your property values.
For additional information, the Realtors at Executive Sellers Realty, can always help you determine your fees and what they may cover in your community.