What Does HOA Cover For Condos?

Are you considering buying a condo? If so, you’ve probably come across the term ‘HOA fees’ in your research. Understanding what these fees entail and their purpose is essential before making a purchase.

Homeowners Associations (HOAs) have become increasingly popular, with continued growth expected in the coming years. Today, at least 75 million people in the US reside in communities with associations, compared to 2.1 million in 1970. 

So, what are HOA fees for condos and what do they cover? Read on to learn more and make an informed decision during this crucial transaction. 

What Is An HOA?

A Homeowners Association, or HOA, is a governing body typically established within planned communities like condos. It's an organization formed by the condo owners themselves to manage and maintain the shared aspects of the property.

The condo owners elect a board of directors who will then govern the HOA. These directors set and enforce rules, manage the community’s finances, and decide on maintenance and improvements. This structure ensures that everyone in the community contributes to the upkeep of shared spaces. It also provides a mechanism for resolving disputes and maintaining property values.

What Are HOA Fees?

HOA fees, sometimes also referred to as association fees or condo fees, are recurring payments made by condo owners to their Homeowners Association. But why do condos have HOA fees? The answer lies in the unique nature of condo ownership. 

Unlike single-family homes, condos involve shared ownership of common areas such as hallways, elevators, gyms, pools, and landscaping. The HOA exists to ensure these areas are well-maintained and that the community operates smoothly. They are the financial lifeblood of the HOA, covering the costs associated with running and maintaining the community. 

What Does HOA Cover For Condos?

So, what are HOA fees for condos specifically used for? Let’s break it down.

Common Area Maintenance

The association’s primary responsibility is the upkeep of all shared spaces within the property. A good chunk of the money you pay goes into ensuring that the areas that all residents use are always in good condition. 

That includes regular cleaning and maintenance of hallways, elevators, lobbies, and any outdoor areas like gardens or courtyards.

Utilities for Common Areas

The condo HOA fees also cover the cost of utilities for shared spaces. This involves electricity for lighting in common areas and water for landscaping and shared laundry facilities. Gas for heating in lobbies may also fall into this list.

Amenities

If your condo community offers amenities like a swimming pool, fitness center, or clubhouse, your HOA fees cover the cost of maintaining these facilities. This means that what’s included in your HOA fees affects how you enjoy these shared perks. 

Building Insurance

It’s important to inquire about the building’s insurance policy before investing in a condo. Every building has a master insurance policy that covers the building’s interior and common areas. HOA fees often include this cover, whose purpose is to safeguard against damage from events like fire, storms, or vandalism.

Management Fees

Many HOAs hire professional management companies. The contribution you make goes towards the expertise and services of this outsourced team. The management companies handle administrative tasks, financial management, and enforcement of community rules. 

Reserve Fund Contributions

The HOA allocates a portion of the condo fees to a reserve fund. This fund acts as a savings account for the community, designated for major repairs or replacements in the future. 

If the elevator breaks down or the roof calls for significant repairs, the money will come from this reserve fund account. It ensures that when enormous expenses arise; the community has the funds available, minimizing the need for special assessments.

Security

Most communities have security measures like gated entrances, security cameras, and on-site personnel. Therefore, it makes sense to factor these services into the HOA fees. Again, the amount channeled towards this department will depend on your community and the services it hires.

Administrative Costs

The HOA budget also includes the administrative expenses of running the HOA itself. This covers costs like accounting, legal fees, and communication with residents. Other costs may include holding board meetings, maintaining community websites or newsletters, and managing any community events.

Additional Condo Fees 

It’s important to note that there are additional fees you might incur as a condo owner on top of the usual HOA fees. Since they’re not part of the regular monthly payments, these fees can significantly affect your overall budget. 

Fines

The most common fees that aren’t included in the regular bill are fines. HOAs have the power to impose fines on residents who breach community rules or bylaws. Some infractions that could land you in trouble include noise, unauthorized parking, pet violations, and unapproved modifications to your unit. Note that every association has its set of bylaws, but these cut across most communities.

Special Assessments

Another potential expense is a special assessment. For instance, if the reserve fund falls short of covering a major unforeseen expense or a substantial repair project, the HOA may levy a special assessment on all unit owners. This extra fee is collected to bridge the financial gap, and is due in one lump sum.

How Are HOA Fees Calculated?

The question in the minds of most prospective buyers is, “How much are condo HOA fees?” Unfortunately, the answer isn’t always straightforward, as the board calculates these fees based on a variety of factors. These include:

• The size of your condo unit - larger units typically incur higher fees.
• The overall budget of the HOA, including maintenance, insurance, and reserves.
• The number of condo units in the building.
• The amenities available within the community - extensive amenities like pools, gyms, and concierge services attract higher fees.

The HOA may also conduct reserve studies to assess the long-term financial needs of the community. It will then sum up the total potential expenses and use this as the base of its calculations. 

Penalties For Not Paying HOA Fees Or Fines

Every HOA has a set date by which you should clear your HOA fee. Failure to pay all the fees by this date can lead to a series of escalating penalties.

Initially, you'll likely face late fees and interest charges on the outstanding balance. If the non-payment persists, the HOA could take more drastic measures. They may hire a collection agency, report the delinquency to credit bureaus, or even initiate a foreclosure process on your unit.

It's important to communicate with your HOA if you're facing financial difficulties and work out a payment plan to avoid further penalties. You must address the issue early enough to avoid serious consequences that could affect your ownership and credit standing. 

The Bottom Line

While condo HOA fees can add to your monthly expenses, they also provide significant benefits.

Before buying a condo, carefully review the HOA's budget, governing documents, and any recent meeting minutes. This will provide valuable insights into the community's financial health and the specific services covered by the fees.