FAQs
What are monthly assessments?
Monthly assessments can be thought of as a “bundle of services” that every homeowner, whether single family owner or condominium owner, is typically responsible for. The difference in a condominium is that you are a member of a Homeowners Association that has common expenses that you pay jointly which creates the need for an association.
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Is this the same as HOA dues?
Monthly assessments are the same as HOA dues and the terms can be used interchangeably.
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How are monthly assessments determined?
Initially the HOA dues are a best estimate that is based on similar buildings of similar size and number of homes. Most often this estimate is determined by a professional Property Management firm who has experience running HOAs and is familiar with typical costs. Once the association is in the hands of the homeowners each year the homeowners have a committee that puts together their annual budget and there is an HOA meeting for homeowners to vote to approve the annual budget. This total budget is divided by 12 months, and the monthly amount is multiplied by each homes percentage of ownership. The resulting amount is the monthly assessment for each home.
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What is included in this bundle of services to make up the monthly assessments?
Owning a home requires insurance, utilities, maintenance and repair. In the case of a condominium there is also a professional team that dedicates their time to professionally manage these effectively for cost and performance. In many condominium buildings there are common area amenities that are part of the monthly assessments. Not all budgets are the same so ask your Real Estate Professional what is included in the home you are considering. In a typical condominium, the HOA bundle of services includes:
- Property insurance for common areas
- Earthquake and flood insurance (optional)
- Fidelity insurance for the HOA officers (optional)
- Liability insurance for common areas
- Water and sewer
- Sewer capacity charges (per the municipality)
- Garbage (sometimes this is a separate charge)
- Natural gas (this can also be separated)
- Electricity (for the common areas)
- Common area supplies, light bulbs, etc
- Routine janitorial of common areas
- Window washing typically done quarterly
- HVAC contract if applicable
- General maintenance, supplies, and repair of common areas such as the lobby, hallways and parking garage
- Grounds maintenance including landscaping
- Life safety maintenance and monitoring
- Contract for elevator maintenance and service
- Pest control
- Carpet cleaning of common areas on a regular basis
- Office supplies and equipment
- Taxes, license fees and permit
- Facility manager
- Concierge (if applicable)
- Reserves are required for all the major building components so that monthly assessments have a set-aside each month for later repairs such as roof repair, painting of common areas and the exterior, flooring in common areas, etc.
Some items are typically the responsibility of the homeowner, such as electricity for the residence or personal property insurance.
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Who manages the bundle of services included in the monthly assessments?
Most associations hire a professional management firm that specializes in the management of condominium associations. Smaller associations are often self-managed by homeowners.
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Who collects the HOA dues?
Generally the professional management firm is responsible for collecting the dues and paying the bills as well as managing the on-site staff if any. In smaller associations this is often a voluntary job by an involved homeowner.
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When do I begin making my monthly assessments?
Following the closing of your new home, you are generally sent a coupon book for making your monthly payments or you may choose to sign up for automatic withdrawal. Assessments typically commence after approximately 60% of the homes are sold and closed.
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Do I also need to purchase homeowners insurance if I am a member of an HOA?
It is recommended. Condominiums have a blanket policy for building insurance in the association fee but that does not cover your personal property. You need to check with the HOA to get a copy of their policy to provide to your insurance agent so they can be sure you are covered under your own policy for anything the HOA does not cover as HOA insurance coverage does vary.
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What is the difference between a townhouse and a condominium for HOA dues and services?
There is no set answer. Generally speaking, in a townhouse that is side by side you generally hold title to the land as well as the building, whereas in a condominium you own your portion of the building and a percentage of interest in the land and the other common areas. In many cases townhomes have no HOA dues so the individual homeowner is responsible for all their own maintenance and monthly bills. It will then be up to each homeowner to individually talk to their neighbor and have the funds on hand to contribute jointly when the roof needs repair or the exterior of the building needs a new coat of paint.
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Will I receive bills in the mail for these services?
An attractive benefit of service bundles and professional management is that your life is greatly simplified. You will not receive monthly bills, but will either send in a monthly coupon or sign up for auto pay so your dues get paid monthly all in one payment.
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