Homeowners association fees and condo fees both help pay for shared expenses in a residential community. The biggest difference is usually not what the fee is called, but what you own and what the association is responsible for maintaining.
With a condominium, you generally own your individual unit and share ownership of the common elements with the other condo owners. In many planned communities of single-family homes or townhomes, you own the home and lot while the homeowners association maintains common areas and amenities.
That difference can affect what your association fee covers, how much maintenance you handle yourself and how the association calculates each owner’s share of community expenses.
Key Takeaways
- Condo fees generally cover more of the building and common elements because condo ownership includes shared property.
- HOA fees in planned communities often focus more on shared amenities and common areas.
- What you pay and what the fee covers depend on the community’s governing documents, not simply whether it is called an HOA or condo fee.
What Is the Difference Between an HOA and a Condo Association?
The terminology can be confusing because a condominium association may also be called a homeowners association. For buyers, the more useful distinction is between condominium ownership and ownership in a planned community of individually owned homes and lots.
When you buy a condo, you generally own the individual unit. You also share an ownership interest in the project’s common elements with the other condo owners. Those common elements can include hallways, elevators, roofs, exterior walls, parking areas, landscaping, recreational facilities and other shared portions of the property.
The condo association manages those common elements and collects assessments from owners to pay for their operation, maintenance, insurance and reserves.
In many planned communities of single-family homes, each owner holds title to the home and lot. The homeowners association maintains common elements such as private roads, landscaping, parks, pools or clubhouses for the benefit of the community.
Exactly what belongs to the homeowner and what belongs to or is managed by the association depends on the property’s legal structure and governing documents.
How Are Condo Fees Used?
Condo owners generally pay regular assessments to cover their share of the association’s expenses.
Depending on the community, condo fees can help pay for:
- Maintenance and repair of building exteriors
- Roof maintenance
- Hallways and other interior common areas
- Elevators
- Landscaping and snow removal
- Swimming pools, gyms and other amenities
- Security or building staff
- Association insurance
- Trash removal
- Shared water or sewer expenses
- Other utilities included by the association
- Contributions to reserve funds for future repairs
What is included varies significantly from one condo project to another. One association may include water, trash and extensive amenities, while another may cover little beyond exterior maintenance and insurance.
Condo owners generally still need their own insurance for the portions of the unit and personal property not covered by the association’s master policy.
How Are HOA Fees Used?
In a planned community where homeowners own their individual homes and lots, HOA fees often support expenses outside those individually owned properties.
These can include maintenance and repair of:
- Green spaces
- Common landscaping
- Private roads
- Community entrances
- Playgrounds
- Swimming pools
- Fitness centers
- Clubhouses
- Other recreational facilities
The HOA may also pay for insurance, management, security, legal expenses and contributions to reserves.
Homeowners are often responsible for maintaining their own house, roof, yard and other improvements on their lot. But that is not universal. Some HOAs provide landscaping or exterior maintenance, particularly in townhome, villa or maintenance-free communities.
The governing documents should spell out exactly where the homeowner’s responsibility ends and the association’s begins.
What Is the Difference Between HOA and Condo Fees?
Condo fees may cover more property than the dues in a community of detached homes because the condo association is responsible for substantial shared portions of the building or project.
That can make condo fees higher in some communities, but it is not a rule.
A luxury HOA with private roads, security, a golf course and extensive amenities could charge substantially more than a small condominium association. The amount depends on the association’s actual budget and responsibilities.
| Feature | Condo fee | HOA fee in a planned community |
|---|---|---|
| What you typically own | Your unit plus a shared interest in common elements | Your home and lot |
| Exterior maintenance | Often association responsibility | Often homeowner responsibility |
| Common areas | Funded through association assessments | Funded through association assessments |
| Association insurance | Often covers substantial common portions of the building or project | Generally focused on association-owned or common property |
| Fee amount | Depends on project expenses and governing documents | Depends on community expenses and governing documents |
The better comparison is not simply which fee is lower. Consider what you would have to pay for separately if the association did not provide the service.
How Are HOA and Condo Fees Assessed?
How an association divides its expenses among owners depends on the governing documents and applicable state law.
Some HOAs charge the same basic assessment to each similarly situated property. Others use different assessment formulas based on the type of home, services provided or another method established in the governing documents.
Condo assessments are also governed by the project’s documents. An owner’s share may be based on an allocated ownership interest or another formula established when the condominium was created.
That means you should not assume that every condo owner pays the same amount or that larger units always pay more.
Regular association assessments are also different from fines. Associations may be able to impose fines or other charges for violations of the community’s rules, subject to their governing documents and state law.
Can HOA and Condo Fees Increase?
Yes. Both HOA and condo association fees can increase as the cost of operating the community changes.
Insurance, labor, utilities, repairs and maintenance can all become more expensive. Associations may also need to increase contributions to reserves for future capital projects.
Before buying, look at more than the current monthly fee. Review the association’s recent budgets, fee history, reserve information and any planned projects that could increase costs.
If reserves are not sufficient to cover a major expense, owners may also face a special assessment.
What Else Should You Know Before Buying?
Association fees are only one part of living in a managed community.
Both condo and homeowners associations can have rules governing how owners use their property. Depending on the community, restrictions can involve:
- Pets
- Parking
- Rentals
- Exterior modifications
- Landscaping
- Noise
- Use of common facilities
- Business or commercial vehicles
Buyers should also investigate major planned improvements, the condition of association reserves and any pending special assessments.
If you are buying or selling in an association, you may also encounter a one-time HOA transfer fee or other association-related document charges at closing.
Is an HOA or Condo Association Right for You?
Whether you are considering a condo, villa, townhome or single-family residence, investigate the association’s fees and governing documents before you buy.
Some buyers value the maintenance, amenities and community standards an association can provide. Others prefer to take responsibility for more of their own property and have fewer community restrictions.
The monthly fee alone does not tell you which arrangement is cheaper or better suited to you. Look at the entire cost of ownership, what the association maintains and which expenses remain your responsibility.
Bottom Line
HOA and condo fees both fund shared community expenses, but what they pay for depends on the ownership structure and the association’s responsibilities.
Condo owners generally own their unit and share ownership of common elements, while homeowners in many planned communities own their house and lot and pay an HOA to maintain common areas and amenities.
Before buying, review what the fee covers, how assessments are calculated, whether they have been increasing and what expenses you will still need to pay yourself.
FAQ
Are HOA fees and condo fees the same thing?
The terms are sometimes used interchangeably, especially because a condo association may also be called an HOA. What matters is what the association is responsible for and how the property’s ownership is structured.
Why can condo fees be higher than HOA fees?
Condo associations may be responsible for roofs, building exteriors, elevators, common hallways, insurance and other shared property. That can create more association expenses, although condo fees are not always higher.
What do HOA fees usually cover?
HOA fees can pay for common-area maintenance, landscaping, roads, amenities, management, insurance and reserves. Coverage varies by community.
What do condo fees usually cover?
Condo fees typically pay for maintenance and operation of common elements, association insurance, management and reserves. They may also include utilities or amenities depending on the project.
Are HOA or condo fees included in your mortgage payment?
Usually not. The Consumer Financial Protection Bureau says these dues are generally paid directly to the association rather than included in the payment made to your mortgage servicer.
Can HOA and condo fees go up?
Yes. Associations can increase assessments according to their governing documents and applicable law as expenses and reserve needs change.
