If you buy a home in a subdivision, planned unit development or a gated community, you’ll likely have to join a homeowners association (HOA). Which means you’ll be faced with the prospect of paying monthly, quarterly or annual dues.
Some buyers aren’t interested in homes located within an HOA because there is a common misconception that they rule like dictatorships. Understandably, many people don’t like to be ‘told what to do’ (or what not to do) in their own homes or yards and some believe this is the sole purpose of an HOA.
The truth is an HOA does more in your best interest than you probably realize. These associations help keep property values up and maintain or increase resale values of the homes in the community. The fact of the matter is that HOA dues can benefit you greatly, in ways that you can see and in ways that you might never think about.
Visible benefits from your dues
In addition to enforcing some degree of uniformity in your housing development, even the most basic of HOA fees goes to maintenance of the community’s common areas. That includes curb appeal (streets and sidewalks), landscaping — mowing the grass, planting and pruning trees, and taking care of flowers, lakes and clubhouses.
HOAs also operate swimming pools, gyms, and other amenities open to residents. Many also schedule regular pest control in common areas, and some set up garbage and other services.
Seems like these are pretty useful benefits, right? And there’s more to come.
You can understand easily how you benefit from landscaping and swimming pools and gyms and the rest. But one of the real advantages of paying HOA dues comes when the association uses them for insurance for the neighborhood. Why does a neighborhood need insurance when you are insuring your own property?
This protection covers residents for any physical damage that happens to the common areas — particularly those clubhouses and other amenities mentioned earlier. Much like standard homeowners insurance, this coverage will help when there is damage from fire, wind, hail, and other covered perils.
Without insurance, the HOA would assess special assessments against all the homeowners. Depending on the nature of the damage, that could result in you paying far more than your dues to make the development whole again.
This is one of the most important parts of an HOA insurance policy, because it protects residents of a development if someone gets injured on common property. An injury could result in HOA members being sued, and legal costs and any award in the case could run into the hundreds of thousands of dollars, possibly more.
Why is this your concern? Because, again, the HOA could levy special assessments to raise the money to pay for the case. Remember, you’d have no alternative but to pay the assessment — otherwise, your home could be in danger of foreclosure!
Give your dues their due
Next time you find yourself not wanting to pay the HOA dues in a neighborhood because you won’t be using the pool or the tennis courts or the clubhouse, remember that your dues, especially the part of them that goes toward HOA insurance, protect you from the prospect of paying larger amounts of money at unexpected times and could likely save you money over the long term. The HOA is your advocate, and does a lot to ensure the viability of your neighborhood as a wonderful place to live, and equally as important, protects your investment.