What Is an HOA Fee?
Updated April 6, 2016 . AmFam Team
If you’re considering buying a condo or townhome, you may have heard about Homeowners Association fees. But what’s the purpose of an HOA, how much will you pay for dues and does your HOA cover insurance? We’ll cover it all and more.
What are HOA Fees & What Do They Cover?
Homeowners Association fees are very common if you live in a condo or housing development. HOAs are responsible for collecting monthly or annual fees from each resident (including you!) which go into a “reserve” of money. This collection of funds is intended to help keep the building you share looking and working beautifully all year long. Some of the HOA dues go into regular maintenance like lawn care and garbage collection, but other amounts are saved for special projects like repaving the parking lot, repairing the roof or fixing a pesky broken elevator.
Do HOA Fees Cover Insurance?
Paying your HOA fees doesn’t mean that you have insurance coverage. Remember, your HOA fees provide coverage for the exterior structure of your building — it doesn’t cover anything inside your structure, like your personal property. It also doesn’t offer liability protection for accidents that occur inside your unit. That’s why you’ll need to purchase homeowners insurance to protect your home, belongings, and to have liability coverage which will cover bodily injury, medical expenses and legal fees if someone were injured on your property. Find out more about the protection homeowners insurance provides.
Average HOA Fees
HOA fee amounts vary due to a number of reasons. Things like property type, location, number of units that are occupied or unoccupied, and amenities all play a role in how your fees are determined. Usually, the more services and amenities your HOA offers, the higher the fees.
When searching for a home or condo that has a homeowners association fee, make sure to confirm the total HOA dues in the community you’re interested in buying into.
So how exactly are HOA fees determined? Let’s take a closer look.
HOA Fee Cost Basics
HOA fees don't have to be complicated. Here are some basics to help get you in the know and better understand what you're paying for:
Price. The more upscale the building or neighborhood, the higher the fees are likely to be.
Upgrades. If you live in a condo and it needs a new roof, new parking lot, improved HVAC system or hallway decor, those costs will come from the HOA’s reserves.
Special cases. If there isn’t enough money in the reserves, you and your fellow residents could have to pay a special assessment fee if the association approves a project through a vote.
Factors. Fees for each unit are typically based on its size and/or number of bedrooms, etc.
What Happens If You Don’t Pay HOA Fees?
Not paying your HOA fees may result in the HOA taking legal action. It depends on your specific contract, but the association may first send a warning letter or charge a late fee. Others may initiate a lawsuit, or in the most serious situations, they can put a lien on the property or foreclose it.
What to Ask Your HOA About Fees
Fees are handled differently for each association. It’s a great idea to get as many details as you can before you move in by asking the following questions:
- What services and expenses are covered by the HOA fees?
- What’s the process for HOA fee increases?
- What is the dues history for the HOA over the past 5 to 10 years?
- How much money is in the HOA's reserve?
- Has the association asked for special assessments in the past, and are any planned for the future?
- How much does the HOA pay for insurance and what catastrophes are covered?
Just starting your search for a condo? Make sure to connect with an American Family Insurance agent (Opens in a new tab) if you have any questions about your homeowners or condo insurance — they’re ready to get you the coverage you need for the peace of mind you deserve.
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Your home is more than a roof over your head. It’s where your dreams grow, your family thrives and memories are made. But the possessions you keep inside are important, too.
Whether you’re renting an apartment or own your home, you’ve most likely got an insurance policy designed to protect your dwelling and the things inside. Should the unthinkable happen and you have to use that insurance policy, it’s important to have a plan in place. And a home inventory list is a great way to get started!
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What Is a Home Inventory?
Quite simply, a home inventory is a complete list of all the items, especially valuables, in and around your home. The best home inventories include photos, descriptions and dollar values of each of your belongings. The more detail, the better! It’ll help you provide a comprehensive list to your agent of items lost in the event your home is damaged or destroyed, allowing you to get the most out of your coverage.
When your describing the items in your list, remember that the more information, the better. Here’s a quick reference list of the type of information you should include in your home inventory list:
- An in-depth description of the items. For example, rather than writing down “diamond ring,” be more descriptive, such as: “an emerald cut diamond ring, with white gold shank, accent stones and initials inscribed below the bridge.”
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- Date of purchase, receipts and photos.
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- Appraisals at time of purchase. Especially if your items were appraised for insurance purposes.
Why Do I Need a Home Inventory?
Whether you’re a homeowner or a renter, everyone can benefit from a home inventory!
If you ever have to make a claim, a home inventory is a great asset to have, especially after stressful events like theft, storm damage or a fire (take a look at how one renter used their home inventory after facing an apartment fire).
When you make a claim, you typically submit information on everything that was lost — which can be difficult to do off the top of your head for all your possessions. Remembering to replace your TV or computer are no-brainers, but when it comes to remembering each piece of jewelry in your jewelry box, things tend to get overlooked. Having a personal property inventory will help, along with knowing how to properly insure your jewelry.
When you have your home inventory checklist, you know exactly what needs to be replaced, and you’ll have peace of mind knowing your entire household is protected.
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The list of reasons why your roof is leaking may seem long, but don’t worry — when it comes to finding the leak and fixing it, the finding is the hardest part. And the good thing about these problems? They can all be fixed. Check out the list and see what’s troubling your roof:
Your roof is old
Roofs don’t last forever. Protecting your home and everything inside it from the elements comes with a cost. And with all that rain, snow, ice, wind and even sunlight wearing down your roof, it becomes more susceptible to leaks. Every roof will eventually need to be replaced, so learn more about how long your roof should last based on what it’s made of.
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There’s no good time to find out your roof needs repair — but you may be able to mitigate that pain by routinely checking your roof for damage after severe weather. Waiting for a leak or damage to present itself gives the problem time to grow and worsen.
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