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HOA Monthly Assessments - Where does your money go?


What are HOA Assessments?


Something to take into consideration when moving into a Homeowners Association is their monthly Assessments. The HOA assessment fee is a homeowners association charge which is established on a regular basis, typically monthly or annually to all its members. Communities have incorporated assessments as a fee to cover day-to-day operations, maintenance services, community events, and even budget shortfalls.


The Association typically employs a management company to advise and assist the Board with its duties but also to collect monthly assessments. The dues collected by management get deposited directly to the associations held bank accounts. HOA’s will normally have two accounts set into place “operating and reserve accounts”. The operating fund is set into place for the day-to-day operations of the community. These are expected expenses that happen on a daily, weekly, or monthly basis. The reserve fund is used for larger-scale projects and repairs on aging assets like the pool, clubhouse, and road.


What are the different types of assessments?

HOA’s in addition to their monthly dues can have a “special assessment” which is a supplementary charge. The board will only put a special assessment into place when current funds are insufficient. It also requires the Board to send a ballot and the membership most vote to pass the special assessment being proposed. For example, special assessments can be added when there are insufficient funds in the operating and reserve fund to re-do the paving of the community, painting of the buildings, or re-plastering of the pool. The HOA Board can require owners to pay their portion of the repair or project after the membership votes on the special assessment matter. Although this additional fee in most cases it is not a reoccurring, special assessments can place a financial burden on the homeowners due to the increase in expenses.


Where is your money from your monthly assessment going?

HOA assessments are needed for the daily operation of a community. The current years operations will usually include maintenance and cleaning of common areas that benefit the community.


These are expected expenses that happen on a regular basis to keep the community operating. Here is a quick breakdown of operating expenses funded by monthly assessments:

· Services: landscaping, maintenance, security, pool maintenance

· Utilities: electricity, water, gar, sewage

· HOA Management: manager, office supplies, correspondence

· Insurance

· Accounting & Legal Fees

· Common Area Repairs


As mentioned briefly before, there is also a reserves fund that is only used for reserve expenses. These are some examples of expenses that are typically covered by the reserve found:

· Roof replacement

· Painting of common areas

· Pool repair

· Major Landscaping improvements or projects

· Paving and sidewalks

· Construction Renovations of amenities such as playgrounds, gym, courts, etc.


If a community has insufficient reserve funds this is when the Board would implement a special assessment to cover for the improvement. It is important to understand that HOA fees can differ within a development, and it is always important to stay in tune with your community actions.


If you want to learn more or have any questions, please contact Alliance Association Management today at 951-412-1662 or by email Info@thealliancemgt.com Thank you!

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