Do HOA Dues Cover Taxes & Insurance?

Attached housing typically requires a homeowner's association to oversee shared areas.

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Buying an attached home, such as a condominium or townhouse, is often an affordable way to become a homeowner. These homes belong to a larger community run by a homeowner's association. HOAs oversee various aspects of the community and require each homeowner to pay dues. HOA dues cover services that benefit the property's common areas and owners' interests. You pay HOA dues in addition to the real estate taxes and homeowner's insurance for your own property.

The Basics

Newer subdivisions and planned unit developments also have HOAs to keep individual properties and neighborhoods uniform in use, architecture and overall aesthetic appeal. HOA covenants, conditions and restrictions (CC&Rs) limit homeowners' ability to alter their properties without prior HOA approval. The restrictions help maintain the appearance and services of the community, which can help property values. As automatic members of the HOA, homeowners must pay dues and have some decision-making rights with respect to their community.

HOA Dues

HOAs usually assess their fees monthly and always bill homeowners individually. While your mortgage payment may cover your real estate taxes and homeowner's insurance, it never covers your HOA dues. Lenders consider HOA costs when evaluating you for a mortgage because you are responsible for the fees as long you own the home. Delinquent HOA dues can result in a lien on the home and can even lead to foreclosure by the HOA.

Master Insurance

HOA dues help pay for a master insurance policy that covers the common areas of the community. A master policy differs from an individual homeowner's insurance policy, which protects a single property or the interior of a condo unit. The insurance usually covers damage caused by hazards such as fire, extreme weather and sometimes flooding and earthquakes. It may also protect homeowners from lawsuits for injuries on the premises. HOAs file income taxes, too, according to Dues also cover the HOA's corporate or federal tax obligations.

HOA Expenses

The extent of services offered by HOAs varies by statutory law and the HOA's CC&Rs. The most common services are: trash removal, sewage, landscaping, pest control, maintenance and repair of certain building infrastructure, property maintenance and repair of common areas and the building exterior. Roof leaks, street paving, painting and pool and clubhouse cleaning are some examples. Fiscally sound HOAs maintain reserves to ensure they have money for major future repairs, such as roof replacement. HOAs without sufficient funds often levy special assessments, adding to homeowners' monthly dues.