A condominium or homeowner’s association (HOA) is a great choice for people who enjoy having well-managed common spaces and who want to be a part of a community of homeowners. Before investing in one, it is important to understand what exactly owning a HOA-governed unit entails and what responsibilities you have as a homeowner. In addition, I want to highlight the key differences in a condominium and an HOA, as these are often used interchangeably but carry some differences.
The Definition
Condominium is a specific type of land ownership. Condos will contain a minimum of two units where each unit is owned by separate people who all have joint ownership in the common spaces. Condos are part of an HOA, or “homeowners association,” whose role is often to collect condo fees, enforce the HOA-specific rules and regulations, and manage the budget.
HOA’s are not limited to just condominium complexes. While this is popular, other examples are multi-families converted into condos, townhouses, and any home that is governed by an association. In other words, all condos are part of an HOA, but not all HOAs are condo associations. Be sure to always ask your real estate agent if the property you are interested in is part of an HOA, as this can drastically change what responsibilities you have as a homeowner.
HOA Fees
HOA fees are a monthly fee paid by every homeowner to cover the shared expenses in the association. This fee may go up and down based on the HOA’s planned expenses. Typically, a certain portion will be used for reserves to take care of the extensive maintenance issues that may arise. If the funds do not cover expenses, the unit owners might incur a “special assessment,” which are extra fees to cover these emergency expenses.
Rules and Regulations
Almost all HOAs have established rules and regulations that will be laid out in the paperwork. They explain guidelines for proper usage of the common areas and the units. It is important to have your agent and attorney review these rules and regulations.
Final Words
Before making your decision, it is important to understand exactly what you are committing yourself to for the term of your property ownership. Whether it’s an investment or first home, getting a grasp of what the expenses and responsibilities are of an HOA can be the difference between a negative and positive experience.
