What Are Assessments in a Condo Association?

Condominium ownership is a popular way of owning a home. You earn the equity of a property owner, and if you want to stay away from some of the burdens of being a homeowner, such as lawn care and maintenance, all it takes is a phone call and it’s someone else’s problem. However, you’ll still have to face the unexpected expenses, monthly fees, and special assessments of a homeowner’s association (HOA).

What Are the Fees in a Condominium?

There are items that the homeowner’s association (HOA) budgets for each year and the fees are passed on to the condo owner; this is paid separately from their mortgage payment. These fees cover items that are paid for collectively, such as insurance, trash removal, landscaping, exterior painting, snow plowing, pool maintenance, and more. Don’t expect your fees to be reduced based on services you don’t use. Even if you never take a swim in the pool or work out in the gym, you’re expected to pitch in to maintain them.

How Do HOA’s Budget Fees in a Condominium?

When you purchase the property, you will be informed of the current monthly fee amount. Keep in mind that these fees can be raised over the years in keeping with current expenses. The monthly HOA fee consists of two parts: an amount to cover the current year operations and an amount that goes into reserves; reserves are for long term repairs and replacements, such as a new roof for the community center or repaving parking areas.

What Are Special Assessments in a Condominium?

However, in the event the HOA board has unexpected expenses and there is no money left in the reserves to cover them, the board has the authority to impose a special assessment to cover the one-time expense of a major repair or improvement. Take lawn care for an example. HOA fees typically cover the cost of a landscape service to mow and maintain the grass. In the event a tree care service is called in to remove a dying tree, the HOA may vote to impose an assessment fee to pay for the removal expense.

Monthly assessments may also be needed to meet rising insurance premiums. If New England suffers from a deadly hurricane season, many insurance companies will drastically raise the rates for hurricane or flood insurance.

As a condo association, it’s important to start off on the right foot with your new condo owners. One way to help them assimilate is by ensuring they are properly educated on the condo’s policies, along with expenses and fees they will be responsible for each month. It’s also vital to protect your association from liability by being properly insured. To learn more or to speak to an expert, contact H&K Insurance today!