What do hoas cover

Depending on many variables — including your own personality — you might find an HOA and its associated dues either a convenience or a hassle or some measure of both.

And an HOA does come with a fee. But you might not be clear on what those mandatory dues are actually doing for you. Let our guide, with expert input, serve as your primer on what to expect from HOAs. Condo HOAs manage the buildings where the condo units are located, as well as common areas surrounding them — think lobbies, patios, hallways, swimming pools, elevators, and recreational areas.

The HOA also covers insurance for these areas, as well as staffing and property management. Typically, condo HOA fees would also cover utilities, such as lighting. You could also expect your condo HOA to cover major repairs that might be needed, such as a new roof or elevator.

These expenses could include repaving private roads or replacing elevator mechanicals. Suppose a repair such as this happens, and the reserve fund is not large enough to cover the costs. In that case, your association could levy a special assessment to make up the difference — this is in addition to your regular association dues — or the association could also need to take out a loan, which could result in a significant but temporary increase in dues.

You can learn more about this here. However, Minnesota made it illegal for a homeowners association to use reserve funds to pay regular operating expenses. All associations in Minnesota are required to purchase a master insurance policy to protect their community's building structures and community property against damage.

This coverage benefits all owners in the community; however, remember that this Insurance does not replace the need to carry your own homeowner's policy. Want to learn more about HOA insurance? Check out more resources here. Some associations automatically set aside money each month to cover unforeseen community expenses and emergencies that cannot be paid for by the reserve funds.

Many HOAs use a portion of their fees to cover the salaries and benefits of a community's management, janitorial, and maintenance staff if your community chooses to employ any of these. These team members play an essential role in the success of your community and maintaining a consistent image. It is important to have the right team in place for these key roles, as they make your community's common areas clean, sanitary, and kept in working order.

Keeping your community well maintained is especially important if you have a clubhouse or pool area with restrooms or common areas such as a lobby or patio where there tends to be much traffic. Here are 6 of the most common items your HOA fees are likely to cover:. Lighting for streets, parking lots, tennis courts, clubhouses, etc. In addition, a community needs water for irrigation, swimming pools and other facilities.

Indoor areas also need to remain well ventilated and comfortable, whether that means providing heat on cold days or air conditioning on warm days. All of these utility costs are covered by your fees. Associations need insurance to protect common areas from damage, which you can obtain under a master policy.

Are utilities included? Which ones? Line up the fees—and their inclusions and exclusions—against those of other developments in the area, especially those that are already on your shortlist. An HOA may adopt one of several approaches to financial management. These choices especially affect how it funds unexpected expenses and such capital investments as replacing an HVAC system. Here's how the assessment route works: When a major expense, such as replacing a roof or elevator, comes up—and the HOA's reserves lack the funds to pay for it—the association may charge each homeowner a special assessment.

These levies can run into thousands of dollars. Developments often draw up multiyear plans for repairs and capital investments, including their annual costs and the expected balance in the reserve fund at the time the outlays will be required.

Ask to see those documents, paying special attention to how well the needed expenditures line up with the balance of the reserve fund.

Professional help can be valuable when poring over these spreadsheets. His company's, Manning says, is to "have the clients discuss the financial statements with a CPA [who is an] expert in analyzing [developments'] financials.

The HOA should be able to provide such a list. Ask, too, if any special assessments are planned in the future. Note that economies of scale may mean that special assessments for a certain capital expense may be smaller in HOAs that have many members and higher in smaller HOAs, where a similar expense will have fewer homeowners to fund it.

When contemplating a property purchase in a planned development, you'll of course factor the impact of its HOA dues into your overall finances. So, too, will prospective mortgage lenders. As a result, you may wrestle with vexing tradeoffs as you decide among properties.

Higher HOA fees could leave you with a smaller approved amount to spend on your house compared with choosing an alternative property with low or no fees.

Interestingly, the presence of fees doesn't necessarily reduce the value of a property; if anything, there's evidence of the opposite effect. Your prospective lender can provide the mortgage-payment figure, and you should already have the property-tax and HOA-fee numbers. Alternatively, many online mortgage calculators, including the one we linked to above, also allow you to request quotes from mortgage lenders on rates and maximum approved amounts.

Since the rules and regulations of any particular HOA may be unique, don't rely on second-hand information or past experience at other developments to learn what an HOA's rules and covenants are. Be sure to check if the document is up-to-date before you proceed too far into the buying process. You could find you're restricted in more ways than you might assume. If environmentally friendly living is a personal priority, check the HOA's green provisions, beginning with what can be planted around your home, and how that vegetation may be maintained.

For example, some HOAs do not allow xeriscaping, an environmentally friendly form of landscaping for arid climates, and may limit the size and composition of any garden you plant.

The rules may also dictate the use of particular fertilizers, pesticides, or sprinkler systems to maintain the yard and ban the likes of compost piles and solar panels. Check for any language that might prevent you from, or even just complicate, renting out your property. As in any community, disagreements arise within a planned development, sometimes over certain residents bending or breaking the rules.

Before you buy, explore how rules are set and enforced and what penalties are imposed against rule-breakers. Sanctions can be strict. Ask about the process for resolving any conflicts, as well as how the HOA manages additions to or amending the rules. Request a list or other accounting of conflicts and rule violations the association has had to resolve. Be sure to check for any past, present, or pending lawsuits in which the HOA is involved.