If you purchase a home in a planned development, you'll probably be obligated to join a homeowner's association. In return for general maintenance and shared services, your homeowner's association -- HOA for short -- will typically assess periodic fees and send you invoices or statements showing the details. If HOA reserves are running low, you may also receive notice of a special, additional fee assessment.
Most HOAs assess owners for certain services and upkeep that benefit the whole community. How much you'll be charged and how often should be outlined in your HOA agreement. Expect to be charged for dues on a monthly or quarterly basis. Potential costs that your HOA dues cover include:
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- Common area maintenance and upkeep.
- Common area repairs and equipment replacement.
- Common area landscaping.
- Security guards and janitorial staff.
- Utilities like water, gas, electricity or trash.
- Exterior upkeep of condo walls, doors, fences and roofs.
Your HOA will issue you a paper or electronic statement on a periodic basis to charge you for association dues. Most HOA invoices include the following information:
- The name and address of the sender.
- The name and address of the recipient.
- The statement date and due date.
- An account number
- Current balance due
- A description of fees
- A record of your last payment received.
Your HOA statement will explain your options for paying your dues. You may be able to have the funds automatically withdrawn from a bank account or credit card. Alternatively, you can send a check to cover the dues.
Other Types of HOA Statements
You could receive an HOA statement with a special assessment on it. This can happen if the HOA incurs large costs -- for example, a damaged clubhouse or a series of condo roofs that need repairs -- and it doesn't have enough funds in the reserve to cover the expense. You'll be sent a notice before you receive a HOA statement for a special assessment.
In addition to regular dues, expect to receive a comprehensive annual statement from your HOA. The purpose of the annual statement is to inform you of the HOA's financial activity during the year. The balance sheet details the HOA's current funds levels and outstanding financial liabilities. The statement of changes in fund balance will detail how much money the HOA brought in from association fees and how the fees were spent.
Read your HOA's annual statement carefully, because it's often used to justify an increase in association dues. Your HOA's Declaration of Covenants, Conditions and Restrictions and bylaws will limit how much the association can increase dues. As with special assessments, you'll receive notice of an dues increase before it is levied.