By definition, a homeowner’s association (HOA) is an organization within a subdivision, planned community or condominium that makes and enforces rules for the properties within its jurisdiction. Purchase of the property automatically makes the homeowner a member of the HOA and dues are required.
Most HOA are incorporated, subject to state laws and have an elected board of directors that oversee the HOA governing documents.
HOAs collect a monthly association fee or annual dues to pay for upkeep of common areas such as parks, tennis courts, elevators, gyms and swimming pools. They can impose special assessments on homeowners when the association lacks sufficient reserves to pay for repairs and/or improvements. HOAs can also place a lien on a property if a homeowner falls behind on his dues, and penalties can be imposed for breaking the rules.
Benefits of an HOA
Although HOA fees cannot cover every major property update/repair, the fees contribute towards a reserve account for future improvements or to repair unexpected damage not planned for in the budget. Owners would not be responsible for these updates because they are part of the HOA. This provides the community a sense of security and may save them money in the long run.
One of the most attractive benefits to HOA fees are its amenities. Some communities offer gates, security, swimming pools, clubhouses, gyms, and other attractive amenities that are paid for through HOA fees. These amenities can easily convince buyers of the benefits of an HOA because the added entertainment often outweighs the cost of the fees.
Insurance coverage is an advantage that condo owners derive from their HOA. Condo fees include the insurance of the building, including the hazard and liability insurance. It is important to research what insurances are included in the HOA fee and determine if the benefits outweigh the cost.
Property value protection
One of the most beneficial long-term advantages of an HOA include the regulations put in place by the board that ultimately protects the property value of the home.
Bottom Line: Each community has its own unique coverage included in its HOA fees. When purchasing a property with HOA fees, you should figure out what you can afford, what is important to your household, and exactly the fees include.