Homeowners Association (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs. HOA fees are typically paid monthly and run on average from $100-$700 per month - these are indeed estimates, and can vary depending on many factors (especially if there are higher-end amenities being provided via the HOA fees such as a concierge, pool, fitness center, or valet). Fees are normally set by the HOA's board of directors and adjusted annually - oftentimes, an HOA board of directors is simply all the homeowners in a complex or building, if it is small, or if there are a large number of owners, the board of directors is typically elected by all homeowners. Any excess HOA fees that exist after paying for pertinent services as described above are stored in an account and called reserve funds.
What are Condominium Special Assessments?
Occasionally, Homeowners Associations need to levy what are called special assessments. Special assessments are a one-time expense that the building (or more appropriately, the homeowners) needs to pay for, such as significant maintenance or repairs (i.e. a new roof for the building, facade brick repointing, etc.), Low monthly HOA fees, or inadequate reserve funds, have the potential to lead homeowners into a situation where a special assessment is necessary to cover large expenses.
Factor HOA Fees and Special Assessments into your Condo Purchase
When purchasing a condominium, HOA fees, as well as the status of special assessments, need to be factored into the purchase price and ongoing cost of living. Make it a point to review existing financial information for the building, including reserve fund levels, and special assessment information, when buying a condo. |