Homeowners' fees and special assessments
By JONI HERNDON
Published February 4, 2005
Q: What are homeowners' fees? Do all town homes, condominiums and co-ops have them?
A: All communities with mandatory homeowners associations have documents stating your rights and obligations as a homeowner and the restrictions of the community.
As a buyer of such a property, you will be obligated to become a member of that homeowners association (HOA). You pay a fee for the maintenance of recreational or other commonly used facilities, such as landscape maintenance, elevator maintenance, entry signs, guard gates and on-site property managers.
Most attached housing, town homes, condominiums and co-ops, have mandatory association fees and restrictive covenants governing the use and occupancy of properties in the community. They are deed-restricted communities.
If you are purchasing a property in a community with a mandatory HOA, have the seller provide you with a homeowners association disclosure. The summary will tell you how much your fees are, who is in control of the HOA, and your obligations as a prospective purchaser.
It is important that you find out if the condominium, co-op or town home development is well-funded. The biggest concern for a buyer is a special "assessment," which is a single charge levied against a property to defray the cost of a public improvement that will presumably benefit the community it serves. Public improvement could be the pool, clubhouse or security guard house. In other words, a homeowners association can levy a special assessment for the repair of the common amenities of the community if there isn't enough money in reserve to pay for the repairs.
You also should know that your failure to pay the mandatory HOA fees or special assessment could result in a lien on your property.
Q: Who pays the current special assessment on a property I want to purchase?
A: Good question. Many mandatory homeowners associations have property managers who take care of the maintenance and budget for the community. If the seller has been notified of a special assessment, find out how much it is and when it is due.
Special assessments typically are levied prior to the work being completed. Small assessments, typically under $1,000, can be a one-time charge and due at some time in the near future. Larger assessments can be incremental - 25 percent now, another 25 percent in three months, again in six months, and the remainder in nine months.
If you want to purchase the property in the next 30 to 45 days, negotiate with the seller the amount of the special assessment they will pay. Another consideration is having the seller lower the purchase price. All obstacles in the real estate transaction are negotiable.