Understanding HOA Fees, Reserves & Special Assessments


By Jen Furlong, @properties broker

Buying a condo isn’t quite like buying a single-family home. While individual homeowners are typically responsible for the entirety of a home’s maintenance and repairs upon purchase, condo owners delegate part of this responsibility to a Homeowners Association (HOA), thus incurring a monthly cost known as an ‘HOA fee’ or ‘monthly assessment.’

Here are the basics of what you should know about these fees and other costs associated with condo ownership.

HOA Fees

Monthly HOA fees cover a variety of costs typically required of a building. These can include electricity, gas, heat, cable, Internet, landscaping, building maintenance and repairs—even the use of common area amenities such as pools, fitness rooms and business centers.

HOA fees also cover insurance for the building—but not each individual unit—and overhead costs such as employee salaries.

Because multiple parties live within a building, all residents are responsible for a portion of the fees needed to maintain the communal space, hence the inception of monthly assessments.

Reserve Funds

A well-run HOA also sets aside a portion of its monthly dues into a reserve fund. This fund is meant to pay for the costs of larger, one-off expenditures that occur sporadically. Examples of these would be projects such as replacing an older roof, repairing a faulty elevator or remodeling the lobby.

Special Assessments

Special assessments occur when a building doesn’t have enough money in reserves to pay for a project not otherwise covered by the monthly HOA fees.

When this happens, the Homeowners Association is forced to charge a special assessment fee to each condo owner. This demand for a large amount of money at one time can often blindside condo owners and sometimes deplete them of much of their savings.

In a perfect world, every building would remain in immaculate condition and special assessments would never need to be levied, but as we all know, the only constant in life is change, which is why it’s very important to understand the costs involved in purchasing a condo.

Making sure a Homeowners Association has a reasonable monthly fee and a solid reserve fund to cover any unforeseen issues are just two things you can do to help protect yourself.

Written by @properties
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