Homeowners’ association (HOA) fees are dues collected from homeowners within an HOA to assist residents with maintenance and help cover HOA operation and other expenses shared by members. On average, fees range from $100 to $700 per month but vary depending on community size, number of common areas, and amenities managed by the HOA.
If you own a home subject to an HOA or are considering buying one, make sure you understand your obligations under the HOA’s governing documents. Rocket Lawyer’s document review service can help you understand these obligations better. Click here for more information about how Rocket Lawyer can help navigate your HOA fees.
Average HOA Fees
On average, HOA fees range from $100 to $700 per month. However, this number fluctuates dramatically depending on geographic location, the type and size of the community, services and amenities provided to members, and the number and size of common areas.
For example, the average housing association fee in 2017, was $331 per month, but some luxury communities collect thousands of dollars from individual HOA members each month. Location also affects HOA dues. The city with the greatest increase in average HOA fees over the last 10 years is the Virginia Beach-Norfolk-Newport News, Virginia-North Carolina area with a 75.4% jump, largely owing to increases in the cost of living and public services, and utilities.
What HOA Fees Cover
In general, annual HOA fees cover costs related to the day-to-day operation of the HOA, maintenance of common areas, landscaping, insurance, security, and other overhead expenses shared by the owners.
HOA fees typically cover expenses like:
- Landscaping: Depending on your community, the HOA may provide landscaping services to residents as part of annual dues. However, it is more common for an HOA to include costs associated with landscaping common areas in annual dues.
- Insurance: Insurance costs include, but are not limited to, those costs required to insure common area structures. This expense may also include liability and negligence insurance to cover actions of the HOA’s board of directors.
- Maintenance of common areas: The costs of maintaining roads, clubhouses, pools, spas, and other common areas are defrayed by all of the homeowners as part of annual HOA assessments.
- Utilities to common areas: Generally, HOA fees cover the cost of utilities for common areas, including streetlights, pools, and clubhouses.
- Trash & recycling pickup: If your neighborhood provides trash and recycling pickup, these expenses may be included in annual HOA dues. Alternatively, these costs may be invoiced separately.
- Security: If your neighborhood has security cameras, a gate attendant, security guards, or other security features, the costs may be included in HOA fees.
- Reserve requirements: Reserve requirements are monies collected for future repairs and maintenance, including roof repairs, painting, paving, and other general expenses.
Types of HOA Fees
HOAs collect several types of fees, also known as assessments. The most common fee is a monthly or annual assessment, which covers general HOA costs and maintenance of common areas. In addition to these fees, HOAs charge members special assessments for community improvement projects, fines and penalties, or additional assessments specific to individual property owners.
In general, there are several types of HOA fees, including monthly and annual assessments, special assessments, fines and penalties, and additional assessments.
Monthly & Annual Assessments
An HOA’s monthly or annual assessment is a fee collected by the HOA to cover maintenance costs and other expenses related to common areas. Fees are collected on a monthly, quarterly, or annual basis and can increase depending on the needs of the community and maintenance costs. Fee details and limitations are described in the community’s governing documents, including the covenants, conditions and restrictions (CC&Rs) and rules and regulations.
This example from the California Association of HOAs details assessments as follows:
“The assessments levied by the Association shall be used exclusively to promote the recreation, safety, and best interests of the residents in the properties and for the improvement and maintenance obligations of the Association.”
Another common HOA fee is a special assessment, which is levied when a special project needs funding, the HOA is faced with damage caused by a natural disaster, or other unexpected expenses arise. For example, if a community clubhouse floods and repairs aren’t covered by insurance, an assessment may be necessary. An HOA’s rules and regulations typically include procedures the HOA must follow to levy such assessments, including required notice or voting.
This example details special assessment amounts and approval procedures:
“As allowed by California law, and as reasonably required by need, the Board of Directors may for any fiscal year, impose special assessments which in the aggregate do not exceed five percent (5%) of the budgeted gross expenses for that fiscal year. For any special assessment that exceeds five percent (5%), the Board must obtain the approval of a majority of the members at a duly convened meeting where a quorum of fifty-one percent (51%) is present (or by written ballot where a quorum of 51% responds), except in an emergency situation as defined by Civil Code §1366 or an exception existing under Civil Code §1365 related to borrowing from reserves.”
Fines & Penalties
To punish HOA members for failure to pay fees or follow the rules, an HOA’s board of directors can impose fines and penalties in accordance with its governing documents. The documents may include details about how fines may be levied and how much notice the HOA must give members before imposing a fine or penalty. If HOA members can request a hearing, these procedures are also set forth in the HOA’s governing documents.
As an example, this document provides for reasonable fines and 15 days’ notice:
“The Association may levy reasonable fines and/or penalties for violation of the conditions, covenants and restrictions found herein and the rules promulgated hereunder. All such fines or penalties are subject to the provisions herein relating to collection and enforcement of assessments, including the rights of the Association to record a lien or foreclose for nonpayment. Any imposition of such fines or penalties are subject to the Owner’s right to a hearing, as follows:
The Owner involved must be given no less than 15 days’ notice by the Board of Directors of any violation occurring and the fine, penalty, or cost to be assessed. Owner must request a hearing within 10 days of receiving said NOTICE, to be held by the Board of Directors regarding the penalty or cost assessed. If a hearing is requested, an opportunity must be given to the Owner charged to appear at said hearing and to present such evidence as he desires to the Board of Directors in support of his assertion, if any, that: (1) no violation occurred and/or, (2) the fine, penalty, or cost is not warranted.”
An HOA can also levy special purpose assessments against individual property owners for costs and expenses incurred by the HOA to perform or enforce an owner’s responsibilities under the HOA’s governing documents. For example, if an HOA member fails to maintain their yard as required by the HOA’s rules and regulations, the HOA can perform the maintenance and then assess a fee equal to costs related to that maintenance.
The HOA’s CC&Rs must detail how long the property owner has to pay the assessment after receiving the bill. What’s more, the governing documents typically detail how much notice the HOA must give the property owner of the proposed assessment. Furthermore, the HOA’s CC&Rs should describe whether additional assessments will or may result in a lien or foreclosure.
How HOA Fees Are Calculated
HOA fees are generally calculated based on the estimated cost of maintenance, security, and other services provided to members. However, when establishing an HOA’s fees, its board of directors will also consider factors like predicted owner delinquencies and necessary contributions to the reserve fund. Once an HOA determines how much money it needs annually, it divides the amount by the number of homeowners, then determines necessary annual dues.
Considerations when calculating HOA fees may include:
- Overall operating expenses: Overall operating expenses serve as the foundation for annual assessments and cover expenses like utilities, vendor services, security, maintenance, and insurance.
- Owner delinquencies: If a large percentage of an HOA’s members are typically delinquent, the board of directors may take this into consideration when establishing or increasing annual fees. This approach can ensure there is enough money in the HOA’s annual operating budget even in the face of repeated delinquency by HOA members.
- Contributions to the reserve fund: A reserve fund is like an HOA’s savings account and serves to hold funds in reserve for unanticipated expenses. Depending on the age of a community’s roads or other infrastructure, a board of directors may wish to contribute more to the reserve fund each year.
- Potential for special assessments: If a community is likely to need a new pool, clubhouse renovations, or other upgrade/repair, the board of directors may consider the potential for special assessments when calculating annual fees.
- State limitations: Some states have statutes that limit the annual assessments an HOA can collect. These limitations may restrict fees to a certain amount per year or dictate how much the HOA can raise dues without a vote of the membership.
Consequences of Delinquent HOA Payments
An HOA’s governing documents act as a contract between homeowners and the HOA, meaning that owners in an HOA-governed development are obligated to pay HOA fees. Plus, HOA members can be fined or otherwise punished for failure to pay assessments. In addition to fining delinquent homeowners, HOAs can use a collection agency, file a lien against the member’s home, and, ultimately, initiate foreclosure proceedings if fees and fines are not paid on time.
When enforcing HOA fees, an HOA’s board of directors may take one or several actions.
1. Restrict HOA Rights
If you fail to pay HOA fees, your association can limit your right to use common areas such as a pool, clubhouse, or other amenities. The board of directors may also revoke your right to vote on HOA matters. Circumstances under which an HOA may restrict a homeowner’s rights will be detailed in the HOA’s governing documents.
2. Assess Additional Fines
An HOA’s board of directors can levy fines or other penalties as described in the HOA’s governing documents. Generally, fines may be assessed for violations of a community’s CC&Rs or rules and regulations. Notice requirements and actual fine amounts are also described in these documents.
3. Use a Collection Agency
If you fail to pay HOA fees or fines, the board of directors can engage a collection agency to obtain the outstanding balance. Furthermore, if you rent the property, the HOA can garnish your rental income to pay for delinquent fees and unpaid fines. Your HOA’s CC&Rs and rules and regulations will detail how long you must be delinquent before the association can resort to a collection agency or wage garnishment.
4. File a Lien
When HOA fees and fines remain unpaid for an amount of time specified in the community’s governing documents, an HOA’s board of directors can file a lien against the property. This gives the HOA the right to begin formal foreclosure proceedings and, ultimately, evict a delinquent resident. Generally, the HOA’s CC&Rs and rules and regulations dictate the point at which the board of directors may file a lien.
If you have unpaid HOA fees or fines and need help determining your rights as an HOA member, contact Rocket Lawyer. Their team of legal professionals can provide document review and consultations to evaluate your situation and help you through the debt collection, lien, or foreclosure process. Click here for more information.
Frequently Asked Questions (FAQs)
Are HOA fees negotiable?
HOA fees are generally nonnegotiable, but if you believe the HOA’s board of directors is collecting fees not provided for in the community’s governing documents, you can challenge the fees. If the HOA’s CC&Rs allow hearings for dispute resolution, demand a hearing before the HOA’s membership and board of directors and challenge the improper fees. Alternatively, a lawsuit may be appropriate.
Can I not pay HOA fees?
As an HOA member, you are contractually obligated to pay the HOA’s fees. These fees should be described in the HOA’s CC&Rs and rules and regulations, so familiarize yourself with these documents before buying a home that is subject to an HOA. Failure to pay HOA fees can result in fines or enforcement through a collection agency, lien, or foreclosure proceedings.
Are HOA fees monthly or yearly?
Whether HOA fees are collected on a monthly or yearly basis depends on the HOA’s governing documents; your HOA’s rules and regulations should indicate whether fees are due monthly, annually, or quarterly. What’s more, you may have the option of paying for an entire year of fees at once or breaking the bill into smaller amounts.
Bottom Line: What Is an HOA Fee?
If you live in a development regulated by a homeowners’ association, you’ll likely have to pay HOA fees to cover operating expenses, maintenance, landscaping, insurance, and other expenses. These fees vary depending on factors like community size, common areas, and other HOA amenities but, generally, range from $100 to $700. If you’re a member of an HOA, make sure you understand your fee obligations to avoid the consequences of nonpayment.
If you own a home subject to an HOA or are considering buying one, make sure you understand your obligations under the HOA’s governing documents. Rocket Lawyer’s document review service can help you better understand these obligations. Click here for more information about how Rocket Lawyer can help navigate your HOA fees.