Ask Phyllis!

Understanding Homeowner’s Dues

Dear Phyllis,

My fiancé and I are getting married next year and to save money we have moved in together. We know we can’t afford to buy a home but are hoping to be able to afford a townhouse. We have been looking online and are really concerned about the high cost of homeowner’s dues.  They kind of seem like a rip off.  My mom told me to ask you, so I am?  Denise

Dear Denise,

Congratulations on your engagement! There are some obvious reasons some Homeowner’s Dues are higher than others. Of course amenities such as pools and spas are big ticket expenses. The cost of maintaining multiple elevators and electronic gates can be another factor.  The extent of landscape and greenbelts can increase gardening expense from one building to another. Some complexes carry earthquake insurance which is also very costly.

Which utilities are included in your dues should be taken into consideration. But keep in mind that in condo (or townhome) living you won’t have the expense or responsibility for maintaining a yard. The Association pays for the water and utilities for all of the common areas.

Homeowner’s Associations (HOA) set aside reserve funds which are collected for the repair and replacement of major components of the property maintained by the building.  These reserves are a savings fund for future repairs and improvements. In the absence of adequate reserves, you could face a mandatory assessment if for instance the roof needed to be replaced. When you do purchase, make sure the building has an adequate reserve fund. You can do this by carefully reviewing the Association’s Reserve Report.  It will note the anticipated life expectancy of items such as plumbing, electrical, roof, etc. 

Although, your dues will cover insurance if the building burns down, they will not cover your personal contents. You will want to be certain to have additional insurance to cover your personal property, furniture, clothing, window coverings etc. But this will be much less than the cost of insurance for the structure of a home.

As you have likely learned renters are at the mercy of their landlords. Owning real estate offers the potential to amass equity, and the security that comes with taking charge of your life. I wish you and your fiancé the best. 

  Phyllis Harb