If you buy a house in a planned development, a subdivision or gated community, you’ll likely have homeowner association fees. No one expects you to be happy about these payments, especially when they often can come after the holidays.
The HOA can make and enforce rules such as what colors houses can be painted, what types and sizes of pets are approved, whether holiday decorations are allowed on properties – even what type of mailboxes are allowed. It can enforce these rules with fines and threats of foreclosure.
These associations say that their rules and methods are necessary for to keep property values up and maintain or increase resale values of the homes in the community. BUT the fact of the matter is that HOA dues can also benefit you greatly, in ways that you can see and ways that you might never think about.
Visible benefits from your dues – In addition to enforcing some degree of uniformity in your housing or condo development, the best-known function of homeowners associations is taking care of the community’s common areas. That includes the landscaping – mowing the grass, planting trees and taking care of flowers, lakes and clubhouses. HOAs also operate swimming pools, gyms and other amenities open to residents. Most also schedule regular pest control in common areas, and some set up garage and other services.
Not so visible benefits – You can understand easily how you benefit from landscaping and swimming pools and gyms and the rest. But one of the real advantages of paying HOA dues comes when the association uses them for insurance for the condo or housing development.
Property insurance – This protection covers residents for any physical damage that happens to the common areas – particularly those clubhouses and other amenities mentioned earlier. Much like standard homeowners insurance, this coverage will help when there is damage from fire, wind, hail, etc. This is really important is condo developments, because it also protects the buildings that house the units. It’s up to the condo owner, however, to protect the contents of the condo. If the condo or housing development didn’t have adequate property insurance, the HOA would level special assessments against all of some of the homeowners.
Liability insurance – This is one of the most important parts of an HOA insurance policy, because it protects residents of a development if someone gets injured on common property. An injury could result in HOA members being sued, and legal costs and any award in the case could run into hundreds of thousands of dollars.
Directors and officers insurance – If someone sues the leaders of the HOA, you would face the wrath of the courts just as much as the directors and officers. And, you could be subject to a special assessment.
Employee dishonesty insurance – This would replace your and other residents’ HOA dues in case an employee steals money from the association.
Give your dues their due, but… – Your dues protect you from the prospect of paying larger amounts. So the dues do perform a useful function. But, you shouldn’t have to pay more than is necessary. That means you should take the initiative. Make sure the HOA is spending your money wisely.
Don’t hate the fact that you have to pay HOA dues. But don’t let your association get away with wasting money either. Your dues perform an important function that could save you money in the long run.
