Homeowners associations (HOA) and condominium associations are different and have different functions within a neighborhood. Both require fees that are paid monthly, quarterly, annually or on the timeline designated by either the HOA or condo association. Both also use the fees for maintenance and the upkeep of the property but the associations use the fees they have collected for different purposes.
What is the difference between an HOA and a Condo Association?
The biggest difference between an HOA and a condo association is the scope of the property managed by the association. When you own a condominium, it doesn’t belong to you, exclusively. What are inside the walls of your unit is yours but from the roof to the foundations of their building as well as the grounds and amenities are jointly owned by all of the members of the condo association. Condominium communities are common interest communities (CIC) and are regulated in many states regarding their management.
In a community of single-family homes, where you own your home and lot, HOA fees are used to maintain common areas and amenities. You are responsible for your own lawn care, and home maintenance. You have no ownership of the common areas they are owned by the HOA who is responsible for their maintenance. Unlike a condo association, the by-laws of an HOA are not recorded in the land records of the planned development.
How are condo fees used in the community?
The shared cost of condominium association members is generally paid monthly. The fee can include any or all of the following.
- Maintenance of the outside of the building
- Trash removal
- Water/Sewer is included in some communities but not in others.
- Hazard insurance that covers the structure and outside of the building
- Lawn and snow care.
- Security
- Heating and air conditioning
- Cable
- Electric
With higher condominium association fee usually comes more benefits to owners
How are HOA fees used in the community?
There are fewer responsibilities for an HOA and they can include the Maintenance and repair of the following:
- Green Spaces
- Common Areas
- Playground
- Swimming Pools
- Fitness Centers
- This includes any other recreational facilities that belong to the community.
You are responsible for the maintenance of your home and lawn within the boundaries of your property.
What is the difference in HOA and condo Fees?
Because condo associations are responsible for the maintenance of the building in which you live, some of the systems, the common area, amenities and grounds, the fees tend to be higher than those of an HOA are. Although, you need to consider that this fee will cover items that you will need to pay for yourself in an HOA. All of the maintenance on your home and lawn will be your responsibility, outside of your HOA fee. Therefore, it may be cheaper in the end to live in a condominium, even though the monthly fees are higher. This is especially true if you don’t like yard work and home maintenance chores.
How are HOA and condo fees assessed?
Homeowners in communities with and HOA usually assess fees uniformly and each owner pays an equal portion of the annual budget. Condo fees, on the other hand, can be assessed on the size of the unit, with larger units paying more than owners with smaller units do. The fees of the association are not equal between each condo owner but are paid based on a percentage of ownership of the unit.
Be aware that many condo and HOA by-laws give them the power to impose fines on members. Fees are used to maintain the property while fines are used to encourage homeowners to follow the CC&R’s of the community.
Other things to be aware of with an HOA or Condo Association
Both HOA’s and condo associations place restrictions on their residents with their by-laws. The rules included are crafted to protect the value of all the homes in the community and can include the following:
- Pet restrictions
- Make yourself aware of major improvement plans that can increase your assessment.
- Are rentals allowed in the condo community? If they are, is the number of units that can be rented, limited by the by-laws. A high number of rentals can lower your home’s value.
- Are major improvements paid with reserves or special assessments?
- Parking may be limited to your personal vehicle and business vehicles are generally prohibited.
Is this the lifestyle for You?
Whether you are considering a condo, villa, townhome or single-family residence, investigate the fees, by-laws and covenants, conditions and restrictions (CC&R’s) that will control, to some degree, what you can and can’t do in the community. Some buyers find life under CC&R’s to be overly restrictive and prefer homes in neighborhoods that will allow them more freedom with their own property.
If you do choose to buy in a neighborhood with HOA or condo fees, use caution before making the final sale and make sure that you know what is required of you concerning fees and how anything in the neighborhood might affect you in the future.
2 Point Highlight
Homeowners associations (HOA) and condominium associations are different and have different functions within a neighborhood.
The biggest difference between an HOA and a condo association is the scope of the property managed by the association.
