Association fees are a necessary part of living in most condominiums, apartments, and townhomes. They keep the common areas clean and running smoothly, and they help to pay for important repairs and maintenance. But what exactly do association fees cover?
An association fee is a periodic charge that owners of units in a residential development must pay to the homeowners’ association (HOA). The HOA is a legal entity created by the developer and turned over to the ownership upon completion of the project that manages and maintains the common areas of the property.
Why Do Association Fees Exist?
The primary reason for existence of an HOA is to keep up the appearance and value of the property. This is accomplished by maintaining common areas, enforcing aesthetic rules, and providing amenities that the residents can enjoy. In order to do this, the HOA must have a steady source of income, which comes from the association fees paid by the homeowners.
Most associations collect monthly or quarterly fees from their residents. These fees go into a general fund that is used to pay for the upkeep of the property. Association fees help to keep property values high by ensuring that the common areas are well-maintained. They also help to prevent special assessments, which are fees that all residents must pay for a one-time repair or improvement project.
Top Five Things Association Fees Usually Pay For
1. Maintenance and Repair of Common Areas
The most obvious item that association fees pay for is the maintenance and repair of common areas. This can include anything from painting the exterior of buildings to fixing broken elevators. These expenses can fluctuate greatly from year to year, and spike in years where large capital improvement projects are needed to maintain the safety and/or value of the building. It’s important to still collect an assessment increase in years not requiring large projects to build a reserve that will allow the Association to pay for such work down the road.
Another big item that association fees go towards is landscaping. This can include maintaining gardens, watering lawns, and trimming trees. Also included here may be things like snow removal, which is definitely an important aspect of building maintenance in a climate like Chicago’s.
In some cases, association fees also cover utilities for common areas such as lighting in hallways or pools.
HOAs are required to carry a sufficient level of property, general liability, D&O and fidelity coverage, along with various other ancillary lines. With most buildings requiring millions of dollars worth of coverage needs, this expense line item can add up quickly especially if the building has additional insurable risks (i.e., elevators) or a history of claims.
5. Management Fees
Management company’s work closely with the Association’s board of directors to carry out their requests and directives, as well as help the residents with their day to day inquiries. Fees go towards handling day to day operations such as resident requests, vendor management, invoicing, assessment collection, board requests, moves, project coordination, seasonal needs, legal matters, etc.
As you can see, there are many different things that association fees pay for. While some people may view them as a nuisance, they are actually essential for keeping up the appearance and value of your property. If the condo owner were living in a self-owned single family home, similar expenses would exist to maintain and improve the property.
If you are looking for a reliable and experienced property management company to handle your association fees, contact us today. We would be happy to provide you with a proposal for our services. Request a proposal today!