What Is Homeowners Association (HOA) Fee?
The phrase homeowner's association (HOA) fee refers to the amount of money that some types of residential property owners must pay to their homeowners’ associations (HOAs) on a monthly basis. These fees are collected to aid the association in the maintenance and improvement of its holdings. HOA fees are generally always imposed on condominium owners; however, they may also be imposed in some single-family house neighborhoods.
Homeowners Association (HOA) Fees: What You Should Know
Homeowners' associations are non-profit organizations that are charged with establishing and enforcing rules for specific properties and the people who live there. Typically, these groups form in planned communities, subdivisions, or condo complexes. When you buy one of these homes, you instantly become a member of the association. As a result, they must pay their dues in the form of monthly payments known as homeowners' association fees.
Condo owners typically pay HOA fees to cover the costs of maintaining the building’s common areas, which include:
- Swimming pools
Some basic amenities, such as water/sewer and waste disposal, may also be covered by fees. If the association’s reserve funds (funds set aside for significant and/or emergency repairs) are insufficient to support a major repair, such as a new elevator or roof, the company may levy special assessments from time to time.
These costs may also apply to single-family homes, particularly townhouses, in certain communities, especially if common amenities like tennis courts, a community clubhouse, or neighborhood parks must be maintained.
Depending on the property or neighborhood, HOA costs might be rather different. The monthly payments might be anywhere from $100 to $1,000. However, the typical monthly cost is between $200 and $300. The basic guideline is that the more services and amenities you have, the higher your prices will be.
When a member fails to pay their HOA dues, it impacts the rest of the community. Due to a shortage of funding, common areas may suffer, or other members may be charged extra fees to pay maintenance costs or other expenditures.
The HOA has the power to take legal action against non-paying homeowners. The activities are regulated by the HOA’s and homeowner’s agreement. To collect delinquent payments, some contracts allow the HOA to impose late fees to the homeowner, while others allow the HOA to file a lawsuit, place a lien on the property, or foreclose on the owner’s property.
Criticism of Homeowners Association (HOA) Fees
The cost of HOA fees is the most common complaint. As previously said, they can cost anywhere from a few hundred to several thousand dollars per month. Of course, this is dependent on the sort of property and the amenities available. Paying monthly fees on top of mortgage payments and other expenses like utilities can put property owners in a bad financial situation.
If the reserve fund isn’t properly handled, owners may pay greater fees. Remember, these are cash set aside for unanticipated and/or major property repairs. Furthermore, the HOA’s board of directors and/or management have a fiduciary responsibility to ensure that the reserve funds are properly kept and handled.
HOAs often establish restrictions for parking and the use of communal areas. In single-family home areas, the HOA may establish restrictions regarding how often residents can paint their homes, what sorts of fences they can have, how they must maintain their landscape, and other related concerns. This can ruffle a few feathers and put homeowners and associations on the defensive.
What Do HOA Fees Normally Cover?
The costs of maintaining common facilities such as lobbies, patios, landscaping, swimming pools, tennis courts, a community clubhouse, and elevators are often covered by HOA fees. In many situations, the rates cover basic services like water and sewer, as well as rubbish disposal. If the association’s reserve funds are insufficient to handle a major repair, such as a new elevator or roof, special assessments may be imposed.
What Is the Average Range for HOA Fees?
HOA dues vary widely, although some estimates place them between $100 and $1,000 each month, with the average falling between $200 and $300. The amount of an HOA fee varies depending on the type of property and the amenities provided—the higher the costs, the more services, and amenities provided. When an association’s reserve money isn’t managed properly, owners may pay increased costs.
What Happens if a Homeowner’s Association Fee Isn’t Paid?
The HOA may take action against property owners who do not pay their monthly or annual fees, as well as any special assessments. These acts are governed by the HOA’s and homeowner’s agreement. Some allow the HOA to charge late fees, while others allow it to file a lawsuit, place a lien on the property, or foreclose on the owner’s home to collect unpaid dues.
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