All You Need to Know About HOA Fees

If you have never lived in an area governed by a community association or HOA before, then HOA fees might catch you by surprise. You may even be wondering what these fees are. No worries! This article will explain what HOA fees are and how they can be used to maximize your benefits.

What are HOA fees?

It's easier to understand HOA fees if you know the full scope of what homeowner's associations do. A homeowner's association establishes and enforces rules within a planned community. They are also responsible for maintaining the community. For example, hiring the proper contractors to perform any repairs, maintenance, or other services that the community itself may need. HOA fees or also known as "dues" are typically charged monthly or annually and are what the homeowner's association uses to pay for the maintenance that it provides for the community.

What are HOA fees used for?

What HOA fees are used to cover often depends on that individual homeowner's association. Though some of the specifics may vary, there are a few basic needs that HOA fees often cover. These include the following:

• Insurance premiums
• Maintenance services
• Management fees
• Landscaping costs
• Snow removal
• Pool maintenance

How much are HOA fees?

Deciding what fees will be for homeowners is a complex process and there is no specific, set amount for HOA fees. The HOA board is responsible for calculating HOA fees and they typically start that process when budget preparation begins. Budget preparation is when the board estimates how much maintenance and additional necessities will cost the community in the coming year. The board then takes this number, as well as the reserve fund, into account before deciding on a total amount which will be divided among all members of the HOA, including the board members.

If you think your HOA fees may be too high, remember that factors like rising wages and inflation may influence your fees as they can result in the HOA having to shell out more money for services to keep the community well-maintained. Your community and its median income also tend to play a role in how high your HOA fees are. You can reach out to your HOA board and see if there are any expenses they can reduce without doing much damage to the community's health. Typically, most HOA boards must present the budget at every meeting, and some states, like North Carolina, even require a budget ratification meeting. There are a few cases where high fees indicate that the HOA board is mismanaging its funds. If you are concerned about mismanagement, your community can hire a professional to audit your HOA and ensure no mismanagement or fraud occurs.

Your HOA board may occasionally raise fees. As inflation and rising costs may make things more costly than the board initially anticipated, this is a natural occurrence. A board may also have to raise their fees if something unexpected happens that they cannot cover with only their reserves. As many state laws protect homeowners and keep HOA's from raising their fees too high, an HOA does not have full power to raise dues as high as they want.

Can I avoid paying HOA fees?

No. When you first purchase your home in an HOA area, part of the agreement is that you will abide by the HOA's rules, including paying a monthly fee. However, since not paying fees can lead to costs for the paying homeowners or damage the HOA's ability to maintain the community, there are consequences that the HOA can enact on those who do not pay their fees.

• Your HOA may charge you a late fee that compounds if you continue to avoid paying your dues.
• You may be suspended from using the community's facilities until you pay your dues.
• Your HOA can file a lawsuit against you and take you to small claims court.
• Your HOA may attach a lien to your property, which would make it hard to sell the property and may even lead to them foreclosing on your property.

If you are in a position where you are struggling financially, most HOA's are willing to construct a payment plan with you to make your payments more manageable.