Homeowner and Condominium Association Fees - An Explanation Part 1

Written by Posted On Friday, 14 March 2014 08:07

A very common question we hear often in Southwest Florida is, "What are all these assessments and fees I see in the listings? We don't have those up North."  Unless you were living in a condominium where you came from, and most of you weren't, it's unlikely you are very familiar with assessments and fees for living in planned urban developments (PUDs). PUDs are large gated communities with hundreds, even thousands, of residents. They are common in some parts of the country, but not like they are here in Florida.

Many of the communities in our area feature amenity rich lifestyle arrangements with country clubs, golf, tennis, sailing, fitness centers, Gulf access, beach clubs, lawn maintenance and security at their gates. The owners are paying one, or more, fees for exclusive access to the community’s amenities and enjoying a safe, secure, and homogenous neighborhood that enhances their property values.

Let's use a good example of a large gated community in Bonita Springs, Florida, with 46 separate subdivisions named Pelican Landing. The types of property you can choose from are condominiums, attached and detached villas, single family homes, custom homes, estate homes, and high rise condominiums. The entire project covers nearly 2,500 acres where almost 3,000 "doorknobs"  are represented. Those 46 separate and distinct neighborhoods each offer a different style of home, fees, and services for their residents.

Pelican Landing, commonly referred to as the Master Homeowner's Association (HOA), which is the umbrella association and name of the entire complex, manages the roads, streetlights, common area landscaping, amenities, and security from the $1,600 fee every residence pays annually. "Common area"  means the land, roads, and amenities all residents share in conjunction with one another, it's their undivided and equal ownership interest. Additionally, every residence is a voting member of the master homeowner's association. Please notice I say "residence"  here versus resident. The residents are how many people live in the home, but each residence is entitled to one vote and pays only one fee.

The fees are in actuality called the "assessments."  Each resident receives access to tennis, fitness center, use of sailboats, canoes, kayaks, and a private island beach park via the master homeowner’s association's boats. The gates are manned 24/7 and there is also a roving patrol both day and night. The only membership not offered in those assessments is access to the private country club's golf courses, as that fee is a private membership, like on any other country club's course.

Now, let's look at a neighborhood, or subdivision, within Pelican Landing called Baycrest at Pelican Landing. These are 90 attached villas with a community pool, small private fitness room, and a community building for exclusive use by their residents only. Each residence is a voting member of Baycrest Homeowner's Association (HOA). Residents own the land under their homes, pay homeowner's insurance, real estate taxes, and replace any dead or dying plants, bushes, or trees on their properties. They are members of both the master homeowner's association of Pelican Landing and the homeowner's association of Baycrest at Pelican Landing. Their assessments, or fees, for living in Baycrest are approximately $600 per fiscal quarter. That $600 pays for maintenance and repair of their private community building, pool, and fitness room, plus lawn care, pest control, outside building painting, roof cleaning, tree trimming, and irrigation water and maintenance to that system. As above in Pelican Landing, the common areas are roads, land, pool, community center, etc., of which every Baycrest owner shares an equal and undivided interest. However, the difference is their own land under their home is not a shared interest with any other residence. The total annual assessment for a Baycrest resident to live in their neighborhood within Pelican Landing is approximately $4,000 per year, or $333 per month. Just add Pelican Landing's and Baycrest's annual HOA assessments together and divide the total by 12.

The confusion starts with Master Homeowner's Associations fees, Homeowner's Associations fees, and the Condominium Associations fees all showing in the listing and the prospective buyer not understanding the makeup of the community and the type of ownership for the property they are viewing. For Pelican Landing and Baycrest, it's pretty simple. For another community that are also a Condominium Association, it will become even more confusing. We'll leave that explanation for Part 2 of this discussion.

Read Part 2 here - Homeowner and Condominium Association Fees - Part 2.

Benjamin Dona is the Broker and Owner of Gulf Coast Associates, Realtors in Bonita Springs, Florida. He holds two advanced degrees, an MBA and an MA, and has an extensive background in both business and marketing. In 1998, he founded Gulf Coast Associates, and formed a group of like-minded Realtor® associates dedicated to offering professional real estate services by concentrating on information, education and the use of leading edge technologies. He also is a recognized expert on the "Net," a much-quoted and read blog author, and a contributor to both national and international news outlets. Benjamin is a member of the National Association of Realtors, the Florida Association of Realtors, and numerous local real estate boards throughout Southwest Florida.

Contact Benjamin Dona at 239-948-3955

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