5 Ways Buyers Confuse Condo and HOA Costs (And Pay Big Time)

Prospective homeowners are faced with a litany of terms and acronyms that they may have heard before but don’t always fully understand. 

For example, you may have a general idea of what a condo is, but you may not necessarily know how living in one impacts homeownership. 

Similarly, you may have heard the term homeowners association (HOA) tossed around, but do you actually know what an HOA does and, perhaps more importantly, doesn’t do?

If you’re looking at homes that fall into either one of these categories, you’ll want to have a clear grasp on what each of these terms means, how they’re similar, and the different expenses you can expect to pay before you buy so you can eliminate some money stress before you get that first bill.

Keep reading to learn more about the difference between condo and HOA fees, including which ones are likely to cost the most money in the long run.

A condo, short for condominium, is a building divided into individually owned units. Condos can be anything from a high-rise building with hundreds of units to a smaller multi-unit residence.

Depending on the size of the structure, there may be common areas — like a gym, rooftop, or pool — and special amenities available to residents. 

Typically, condo owners are responsible for the upkeep of their own units, while all common areas fall under the governance of the condo association. This includes maintenance and updates on everything from those coveted extras (like the pool) to landscaping or even the hallways between the units.

The perks of living in a condo include a sometimes lower barrier to becoming a homeowner, since the prices can be less expensive than single family homes, and include lower maintenance costs since you’re not the only one paying to replace the roof or power wash the exterior.

The negatives include sharing a space with other residents that you didn’t necessarily choose and who may not have the same standards when it comes to common space upkeep.

Condo fees are generally monthly fees that go towards the upkeep and maintenance of the shared spaces, including a lobby, gym, or outdoor area. They may also go towards security, insurance, electric, cable, or parking.

Depending on the condo association’s rules, the fees may be prorated depending on the size of the unit.

An HOA stands for homeowners association, and these are most often seen in planned communities. Similarly to condo associations, an HOA tackles all shared maintenance of common spaces, but their power extends beyond upkeep.

They also have the responsibility of creating and enforcing community rules, including noise, the appearance of units, and what homeowners can or cannot do on the property. This may go as far as to include whether they can hang a flag, plant a tree, or even change the exterior color of their home.

In an ideal world, the HOA maintains the desired standard of living for all members of the community. But, in some cases, there may be overreach.

Monthly HOA fees are charged to residents to take care of regular maintenance, including snow removal, landscaping, community amenities like pools and gyms, or trash removal. 

HOA fees also go towards major maintenance or renovation projects, like replacing a roof or installing a new outdoor grill area.

While both a condo and an HOA may have shared spaces that look similar — for example, a party room or an outdoor entertaining area — there’s a difference in who actually owns these areas.

In a condo association, the condo owners all share the ownership of these spaces and make equal decisions in their upkeep and future. In an HOA, the HOA itself owns them, and any decisions regarding these areas are typically made by the HOA board.

Condo fees are typically more expensive than HOA fees because the condo association's ownership is more extensive. The condo association owns the entire building, while an HOA only owns shared spaces.

This typically translates into lower HOA fees for maintaining and upkeep of those spaces.

Fees are the monthly or annual recurring costs that you’ll pay to a condo association or HOA. This includes the money that goes towards maintenance, upkeep, insurance, or utilities at a condo building, or the funds towards maintenance and upkeep in an HOA. In a condo association, you could also pay a fee for having a pet or using the pool.

Meanwhile, fines are typically assessed when rules are broken. For example, you could pay a fine if you decide to paint your door hot pink and that’s not one of the approved HOA colors, or if you violate the HOA’s rules when it comes to excessive noise.

In both condos and HOAs, the fees are typically charged either annually or monthly, and can sometimes include special assessments in the case of an unexpected project.

These can add significant cost to your recurring payment, though those extras normally occur on a one-time basis.

That doesn’t mean your fees will stay static, however. Your condo association or HOA may meet annually to determine if an increase is necessary.

If your monthly payments are higher than you expected, look into ways to help pay for your mortgage.

From supplementing your income to making sure you’ve explored all avenues to lower your fixed costs, there are multiple ways to add a little extra money to your bank account every month to make the monthly payment feel a little less painful.

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