Learn more about HOA fees for property owners and what they’re used for
Many residential communities have a homeowners association (HOA) that helps to maintain the community, as well as enforce any rules or regulations the neighborhood may have.
The homeowners association ensures that the community’s common areas and landscaping are taken care of. It also manages any other amenities, such as a fitness center, a clubhouse, or a pool.
For the HOA to function, homeowners within the community are usually responsible for making monthly or quarterly financial contributions to ensure that the community can continue to be well maintained and amenities can be improved.
What is an HOA fee?
A homeowners association fee, sometimes called an HOA fee or an HOA assessment, is an amount of money that owners must pay to the HOA. The HOA collects these fees to assist with maintaining and improving the communal areas, landscaping, and amenities in the neighborhood.
An HOA requires that all homeowners share in the community’s cost of upkeep. The fee is set by the board of directors of the homeowners association, who are also residents of the community, based on the HOA’s annual budget.
HOA fees are usually paid monthly and are separate from taxes or property management fees. The homeowner is required to pay these fees directly to the homeowners association. It’s important you read your community’s guidelines as HOA fees vary by neighborhood, and they’ll often change year to year.
What does an HOA fee cover?
- Utilities: A large portion of the monthly HOA fee goes to the community’s utilities. This includes street lamp lighting, electricity for the clubhouse, and air conditioning and heat for the clubhouse, pool or gym facilities.
- Lawn care: The lawn care included in your HOA fees will vary depending on your type of property. Single family homes are usually responsible for their own lawn care, but the HOA fees will cover the cost of the lawn maintenance for all the common areas.
- Building upkeep: For condo, apartment and townhouse communities, the homeowners association fees play an even bigger role. They are used to replace and maintain fences, roofs, exterior painting and pretty much everything outside of your unit.
- Amenities: Some communities include access to amenities such as a pool or a fitness center as a part of the HOA fees. Also, the HOA fees may be used to pay for security.
- Reserve funds: Most homeowners associations set aside a portion of the fees collected to create a reserve fund to cover unexpected or irregular expenses, such as repaving roads, remodeling the clubhouse, or replacing elevator machinery.
What if an owner doesn’t pay their HOA fees?
When a homeowner fails to make their HOA payments, the whole community can suffer. Common areas may begin to appear run down, amenities could be shut down, or other owners may be assessed special fees to cover maintenance costs and other expenses.
If a homeowner doesn’t pay their monthly HOA fee, the homeowners association may take action against them. The contract between the HOA and homeowner indicates what action can be taken: whether it be late fees, a lawsuit, or even a foreclosure on the homeowner’s property.
Read more:
3 reasons why you should hire a local property management company
How can a property management company help?
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