An HOA fee is the standard fee a homeowners association charges its residents each month. If you buy a property in an HOA, you will automatically become a part of this organization and will be required to pay your dues. HOA fees vary in cost from $100-$1,000, but generally fall in the $200 – $300 range.
HOA fees are very common for condo and townhome owners. Single-family and subdivision homes may also have HOAs. Typically, the HOA fee covers the maintenance of properties, common areas, and shared amenities in a neighborhood.Â
How much are HOA fees?
HOA fees can vary widely based on the location of a home. Among the 3,000 HOAs currently operating in the United States, the average HOA fee is $259.
What do HOA Fees Cover?
The general rule in most HOAs is that the HOA handles everything that’s outside of your immediate property. If you’re looking at condos or homes that share walls with other units, everything within the interior walls of your unit will be your responsibility; exterior upkeep is on the HOA.
Common Areas & Amenities
- LobbiesÂ
- Patios
- Elevators
- Swimming pools
- Tennis courts
- Community clubhouse
- Parks
- Playgrounds
- Fitness facilities
- Staff at the locations (doorman, pool attendant, etc)
Maintenance
- Landscaping
- Gates & surveillance
- Pest control
- Repairs
- Snow removal
- Cleaning
Shared Utilities
- Water/sewage management
- Garbage disposal
- SecurityÂ
Does an HOA Pay Your Utilities?
An HOA will often pay for shared utilities, but not individual utilities. Homeowners are responsible for their own electric, gas, water, TV, and wifi bills.
Factors That Cause High HOA fees
If your HOA fees seem unusually high, there is likely a good reason. This may include:
- Luxury buildingsÂ
- Sought-after neighborhood
- Older buildings needing more frequent and extensive repairs
- Buildings with elevators
- Buildings with numerous staff members
- State and local laws
- InflationÂ
- Insurance premiums
- Taxes
Typically, the more amenities that are included in an HOA, the higher your fees will be. High HOA fees may actually be a good thing as they show that the association is managing their reserves and you likely won’t get surprised with a lump sum due.Â
Additional consideration: HOA reserves
HOA boards diligently plan for the long-term value of a planned community. To achieve this, they put aside a portion of each fee collected to be placed in something called an HOA reserve fund.
Think of this as a savings account that the HOA can use for large or unexpected projects. For example, the swimming pool may need its liner replaced at some point. Other big expenses could include replacing the roof, repairing crumbling walkways, and paving shared roads.
HOA fees can go up. If an HOA reserve runs low, the HOA may need to increase its funds, this can raise your monthly dues or require a lump sum payment from all members. HOA boards routinely adjust dues based on expected annual expenses.
How To Asses The Cost of HOA Fees
If your HOA fees seem unusually high, you can request certain information from the HOA board to assess whether the fees are appropriate. An agent can help you obtain these documents:Â
- Governing documents, e.g. articles of incorporation, bylaws, CC&Rs, rules and regulations
- Annual budgets
- Income statements
- Balance sheets
- Accounting and financial records for the past three years
- Meeting minutes
- Developer documents, e.g. community plats, maps, permits, and land surveys
- Insurance policies
- Contracts or third-party agreements
What if you don’t pay your HOA dues?
Unpaid dues can be escalated by your HOA in a number of ways. You will generally receive notification letters if a payment is missed. If those letters are ignored, you may be charged a late fee. The HOA board will usually escalate the situation by then taking away your usage privilege for shared amenities.
Your HOA board is likely to hire a collection agency to recoup your missed fees if you continue with your nonpayment. The HOA may also sue you or place a lien on your property. It’s important to know that you’d be unable to sell your home with a lien in place.
While it may seem extreme, your HOA could actually force your home into foreclosure. Laws on this vary by state. However, HOAs are often permitted to foreclose on homes for unpaid dues.
Are HOA fees worth it?
Many people who live in HOAs enjoy the orderliness and convenience this option offers. HOA living can offer access to high-end amenities you wouldn’t be able to afford on your own property. You’ll also never have to worry about your neighbors creating eyesores. HOA living can also boost your home’s property value.
Of course, some people dislike the lack of freedom that comes with living in an HOA. For example, you may not be able to paint your home certain colors or have your own above-ground swimming pool.
You’ll also be responsible for HOA fees regardless of how your financial situation changes while you’re living in the property. An HOA fee is an expense you can’t cut out of your budget.
What is a homeowners association?
Not every residential neighborhood is part of a homeowners association. With 30% of the U.S. population living in homes located within community associations, you’re almost certain to run into HOA properties when searching for a home.
In fact, the HOA question is one of the top questions before making an offer. If a home you’re making an offer on is located within an HOA, you’ll need to negotiate with the seller on who will pay the HOA transfer fees when you inherit the HOA dues.
HOAs are organizations that manage planned communities on behalf of the original developers. While people often associate HOAs with condos, they are also used to manage communities with single-family homes and detached properties.
Here are the core tasks of an HOA:
- Maintain community spaces
- Enforce rules regarding property uniformity and tidiness
- Manage amenities
- Make decisions about capital improvements in the community/subdivision
There’s no opting out of an HOA. If you purchase a home under an HOA’s control, you’ll become a member automatically. HOAs generally have boards responsible for collecting fees and making decisions. These boards can also impose fees for noncompliance. The “strictness” regarding how you can decorate or alter your property can vary by HOA.
