What You Don't Know About HOA Fees Can Hurt You

   Homeowner's association (HOA) fees are normally associated with owning a condominium or home in a planned neighborhood. Two questions: (1) Why do I have to pay them? (2) What do they cover? are typical questions prior to ownership.  As a part of "collective living" in a planned community there are certain expenses that are borne by all owners. Exterior building insurance, insurance and operating expenses for the common areas, water, sewer, and cable are the most common. Every owner should contribute to the elevators, outdoor pools, exercise rooms and stairwell maintenance as well as the management of the association.

     The State of Florida recommends that 20% of HOA fees be placed in an account for "reserve for replacement". That's in the event the pool cracks from a hurricane, the life of the central cooling plant is shortened by exposure to salt air or the railing on the balconies need replacing. The entrance gates and landscaping also have to be kept neat and operating and the building will need to be repainted every 5 years or so. Most of these are predictable depreciation items.

     Here's where the variable expense comes in.......management and legal fees. What should an HOA pay for a condominium association manager (CAM)? The salary all depends on the size of the association and the size of the annual budget.  How much would you pay a manager in a private business that oversees a $1 million budget? Two hundred units with a $400 monthly fee equal over a million dollars annually.  A typical CAM salary in North West Florida will range from $40,000 - $75,000 a year depending on the perks. What about litigation?  Will there be an attorney present at board meeting or are they “on call”? Is the condo in active litigation?       Are they collecting all the fees on all the units or do they have to hire a collection service?

     If you take the costs of maintaining a home that is the same size as the condominium you are considering and list all expenses including utilities, insurance, and maintenance you will find that most HOA fees are not unreasonable.  You just don’t typically see all the expenses associated with owning your home listed beyond the monthly mortgage payment, insurance and taxes.  Most HOA's are run very efficiently. It's the few bad ones that give them all bad names. With that said, your Realtor® should be able to assist you in comparing various HOA fees. 

     Call us today if we can assist in finding you the right condo for your permanent home or 2^nd home.  We’ll be glad to help. 

The Beaches 360 Team of Counts Real Estate Group

850.710.0302