Prospective homeowners can tell if homeowner association fees are reasonable by considering the condition of the common property, its ongoing maintenance needs, the amount of current HOA fees, how often and how much fees were raised in the past, the possibility of future special assessments, and how well the HOA's reserve fund is managed. The property's HOA fees can also be compared with the fees of similar properties around it.Continue Reading
Homeowner associations levy HOA fees to maintain common property such as security, lobbies, elevators, building exteriors, landscaping, swimming pools, tennis courts, roofs, roads and parking lots. The more facilities there are to maintain, the higher the HOA fee is likely to be. Monthly fees reflect not only ongoing costs, but also the accumulation of a reserve fund against special maintenance costs such as painting a common building's exterior or repairing its roof. When an HOA's reserve fund is not adequate to cover a special expense, the HOA charges homeowners an added fee called a special assessment apart from the regular monthly fee.
Factors that affect how much monthly HOA fees are likely to rise and how often special assessments are levied include the current state of the property and the efficiency of the HOA management. Before purchasing a home managed by an HOA, prospective homeowners should find out the history of fee raises and special assessments, talk to other residents whose homes are managed by the association, get copies of the minutes from past HOA meetings, sit in on a current meeting and carefully peruse the terms of the HOA's CC&R, or covenants, conditions and restrictions.Learn more about Real Estate