If you own a home that is part of the HOA community, you might be wondering: What are HOA fees? Navigating your first homeowners association (HOA) can seem intimidating, whether you’re buying a home or have just moved into a new neighborhood. Knowing what goes into your HOA fees each month can help you understand how the organization works and contributes to upholding your quality of life.

In this blog post we explain exactly what is HOA fees are and why they matter so much when it comes to living in a homeowners association community.

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What Is a Homeowners Association?

Homeowners associations provide accountability so the community can stay attractive and remain a pleasant place to live. Homeowners associations also handle the upkeep of common areas such as pools and parks, giving residents a sense of shared ownership in their daily lives.

Although they may not be necessary for small residential communities, for larger ones, HOAs are often considered essential for maintaining order. With carefully crafted bylaws and regulations that follow the desires of most residents, HOAs steer a community away from disruptive behaviors that could lower property values.

What Are HOA Fees?

HOA fees are increasingly an unavoidable expense in homeownership today. Condominiums have them, and more and more tracts of single-family homes also have them. The money raised this way provides desirable services like landscaping in common areas, swimming pool upkeep, fitness centers, and rule enforcement (paint, decorations, parking, noise).

HOA fees vary greatly depending on the community, the services they provide, home prices, and the affluence of the region. Furthermore, homeowners can usually purchase additional services à la carte. Always ask about HOA fees when looking at a property because some places might charge so much that the fees would eat into your budget. Some people pay half as much in HOA fees as they do for their mortgage, while others pay a couple hundred dollars.

On average, how much do HOA fees cost? Let’s break out key results from the last national census.

National survey finds $250 is the average HOA fee.

82.4% of newly built homes sold in 2021 were in HOA communities.
53% of all homeowners live in HOA communities.
$250 is the average monthly HOA membership fee for a single-family home.
40 million housing units are part of HOA communities.
Roughly 8,000 new HOA communities form each year.

Source: U.S. Census Bureau via iPropertyManagement

What Do HOA Fees Cover?

Homeowners association fees can be steep and might cover a wide range of services. It is important to consider the benefits and drawbacks of HOA fees when shopping for a new community to move to.

The fees are used to maintain the common areas, enforce rules, host annual events/programs for residents, and to independently manage services that preserve property values, thereby providing long-term value to all homeowners in the association.

Remember that affordability should always come first when considering whether or not you should live where there’s an HOA. While the amenities provided may seem attractive initially, be honest about how much you would use such things. Paying hundreds of dollars a month for, basically, a swimming pool you’ll use six or seven days in summer is an expensive way to swim!

From funding legal services to the upkeep of shared amenities, HOA fees are important for homeowners associations. You usually can’t avoid these fees if you want to live in an HOA community. Additionally, since each association sets its own fees, this has to be one of the points of comparison when you’re weighing where to live. Note the HOA fees right next to your estimated mortgage payment.

Here’s an overview of what’s covered by HOA fees.

Municipal services.

From ensuring that all homes are up to code from a structural standpoint to offering regular maintenance and landscaping care for the neighborhood’s greenery, HOA fees seldom go to waste. Furthermore, if used properly, HOA fees can strengthen the community by pooling resources and creating programs that benefit everyone.

It’s easy to see this type of fee as a burden, but when broken down, it might become clear that what you’ll receive in return is worth the cost. Compare HOA fees to hiring your own gardner, pool man, snow sweeper, patrol, and so on. Thanks to HOA fees, most communities can rest assured knowing that their neighborhood won’t suffer neglect and abuse.

Association insurance.

Association insurance—part of your HOA fees—helps keep the community clean, safe, and attractive for residents. This coverage helps residents in times of need. It is a cost-effective way to maintain a high quality of life in any size neighborhood or community. Plus, the peace of mind that comes from knowing that any necessary repairs will be taken care of without worry is a valuable benefit too.

Reserve funds.

As with all important decisions, homeowners should consult an accountant or a lawyer to understand what HOA fees are and to ensure that their decision to pay HOA fees aligns with their economic status and the law. It is essential for homeowners to understand that although their HOA fees cover general expenses and special assessments, they also contribute to reserve funds, which the association invests.

Reserve funds, managed well, can help all the homeowners by reducing overall maintenance costs and providing emergency money. If mismanaged, HOA reserve funds can be lost on bad investments, spent carelessly, or be spent in a nontransparent way.
In most states, HOA boards are legally required to send annual disclosures to the membership each year. Peruse those to see where your money was spent. Likewise, almost all states require that a homeowners association organized as a nonprofit corporation file an annual report with the Secretary of State or they risk losing their “good standing” status.

What Happens If You Don't Pay?

If you don't pay your HOA fees and fail to keep up with any late charges, it could result in severe consequences. Not only might you face liens or foreclosure for delinquency, but late fees will keep accumulating and you might be locked out of certain facilities.

It is important to ensure that the funds are available as soon as possible and consistently paid on time to organize our finances prudently and remain an informed partaker of the community. Think of HOA fees as you do homeowners insurance—an essential expense just like a mortgage.

If HOA fees seem to have been raised unreasonably, or they are said to cover services you know aren’t being provided, keep paying them to avoid trouble, but also discuss these discrepancies with an attorney. That’s a secure step towards mitigating any potential consequences of nonpayment.

Lawsuits.

Being legally challenged by an HOA because of nonpayment of dues can seem daunting. It is important to remember that it is not a foregone conclusion that you will be taken to court or even presented with a lawsuit. HOAs can only pursue certain legal remedies, such as lien foreclosure and condominium fees lawsuits.

The best thing to do is be proactive and work closely with the HOA board and your legal counsel if you are facing possible litigation. That way you might be able to negotiate resolutions and avoid court. Most importantly, stay aware of the due dates for all payments and, if necessary, talk with the HOA about your obligations before payments become delinquent.

While litigation can’t always be avoided, understanding how HOAs approach cases concerning failure to pay will help you navigate future issues more effectively.

Collections agencies.

Homeowners associations have been known to hire collection agencies to obtain delinquent fees. Most of these agencies are unpleasant to deal with.

Are There Other Fees I'll Have to Pay?

Special assessments are a consideration for anyone entering into a planned development and signing an agreement with an HOA. They should be researched thoroughly to ensure that the community benefits from them and they are financially reasonable within the context of the overall cost of living in the community. Even so, these assessments can provide tangible benefits for communities, such as improved landscaping, safety infrastructure, and recreational areas.

Ultimately, special assessments can be an effective way for HOA’s to meet unexpected needs in a community—but it is important to know what you’re agreeing to before signing on with an HOA that has been known to have a lot of special assessments. If the board is constantly coming up with “special” reasons to charge more money, are they managing the community well in the first place? Why is the reserve fund running out early?

Why Are HOA Fees Higher in Some Areas?

HOA fees vary by location and community. The amenities offered and the size of the complex play a role in determining the overall cost—higher amenity counts and larger complexes require higher HOA fees.

However, even within the same ZIP Code, HOA fees can vary due to other discretionary expenses that each association chooses to tackle or defer, based on their priorities.

HOA Fees and the Law

You might wonder: What are HOA fees regulated by, or is it anything-goes? It’s reassuring to know that there are some regulations governing how HOA fees are charged throughout the country. Depending on your state, you may be able to request information about where your money is going; some states require associations to send an annual report to all members. Comparing several HOAs where you live can provide insight into why certain places charge higher fees than others. With these considerations in mind, homeowners should be mindful when comparing potential living locations to ensure that they will be able to afford the HOA fees.

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