What is a Homeowner's Association?

When you purchase a home, you will be required to join your neighborhood’s Homeowner’s Association (HOA). You will be obligated to pay either a monthly or annual fee to the association. An HOA is not a profit-source for the neighborhood. It is simply used to keep the neighborhood up to its standards. HOAs also can enforce rules and regulations for the neighborhood. Usually these rules and regulations will pertain to the appearance of your home and behavior of residents. For example, outward appearance is common for associations to enforce. When a neighborhood is well-maintained, it helps preserve property values.

What do Homeowner Association Fees Cover?

Typically, the more amenities there are in the neighborhood, the more you will have to pay. For example, a neighborhood that has a pool and clubhouse is going to charge more for association fees than a neighborhood that does not have as many amenities. At minimum, the association fee usually will cover such things as maintaining entrance and grounds, and security lighting. In some cases, HOAs will offer snow removal.  On average, members of the association will pay between $100 to $1,200 yearly. Associations that charge up to $1,200 a year are typically going to be a high end neighborhood that have a nice pool and other things.

What Are Maintenance Fees?

When you own a home, you are responsible for your property. However, condos and townhomes are different. Just to clarify, Townhomes, Patio Homes, Garden Homes, Stand Alone condos, and regular condos can all be under a condo regime.  Our Louisville MLS combines these together.  Condo owners usually are not responsible for the upkeep of the outside of the building. When you own a condo, you own your particular unit as well as a share of the common areas of the complex. Condo and townhome owners have a vested interest in the common areas. This is why condo and townhome owners pay a higher fee monthly to live in the complex.  Your condo association may have a yearly HOA fee along with a monthly maintenance fee.

Maintenance fees cover the cost of maintaining the complex’s services and amenities.  Condos vary widely in what they cover.  For example, some cover master building insurance and some do not.  This can be a major expense for you.  Grounds keeping is almost always included along with exterior maintenance.  Snow removal is pretty common in a condo association; some even shovel driveways.  There are several condo associations that include water, sewer, and trash pickup.  You may pay a large fee to the association every month, but your overall living cost could be lower since a lot of the basics are included.  One very important factor to remember is that a percentage of the money you pay for monthly maintenance fees will be put in the condo association reserve account. This money will be used for big ticket repairs such as roofs in the future.  If there is not enough money in the reserve account for repairs, the association may levee an assessment on the owners.

What Are The Consequences of Not Paying Your HOA Dues or Maintenance Fee?

Just like any other bill you may have, it is very important to pay your HOA or maintenance dues. The consequences will vary depending on the neighborhood you live in. Generally, the first missed payment will result in a letter sent to your home notifying you of an unpaid balance. In addition, you could be suspended for using neighborhood amenities. Some neighborhoods will put a lien on your home if you have multiple unpaid dues.  When it comes time to sell your home, the title company will deduct from your proceeds unpaid HOA fees.  The laws that protect Homeowner’s Associations are pretty strong.

For more information, call the condo experts at The Hollinden Team at 502-429-3866.