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Wouldn’t it be nice if you never had to mow your lawn yourself? Or shovel snow off your driveway? How about a swimming pool you don’t have to maintain?
Living in a homeowners association (HOA) can sometimes offer these benefits and more. However, you usually have to pay an HOA fee. What are HOA fees exactly and what do they cover?
Here’s what you need to know.
What is a Homeowners Association (HOA)?
A homeowners association (HOA) is an organization that makes and enforces rules within a residential community. These communities can be subdivisions, condominiums, or other planned communities.
While HOA boards of directors are run by a select group of volunteers, HOA memberships are mandatory for all community residents. This means that when someone moves in, they automatically become a member of the HOA and have to pay HOA fees—that is, monthly, quarterly, or annual fees. Prospective homeowners should keep these fees in mind when budgeting for a home purchase.
What are HOA fees?
HOA fees are periodic payments that community residents are required to make to the association — and condominium residents may pay similar fees to condominium associations. The club then uses these fees to maintain community lands, homes, or facilities.
HOA fees are independent of mortgage payments or property taxes. This means that residents in an HOA community will always have to pay their dues even after they have paid off their mortgage.
What do HOA fees cover?
Which HOA fees are covered varies from municipality to municipality. If you live in, or plan to move into, an HOA community, you can always check the relevant documents of your HOA—usually the Conditions and Restrictions (CC&Rs) document—to see what your HOA covers.
If you’re wondering what HOA fees are used for, here are some examples of what HOA fees can cover.
- snow clearing
- garbage collection
- landscaping and soil maintenance
- Maintaining amenities such as a communal pool or garden
- Common room utilities
- Pest control for common areas
- club insurance
Depending on what their governing documents state, some HOAs also contribute a portion of the fees collected to a community reserve fund. Reserves help cover unexpected expenses when they arise, such as B. Repairing a burst pipe in the community clubhouse. They can also be used for large planned projects such as community roof replacement.
What are HOA fees?
According to the latest U.S. Census data, the average home ownership or condo fee is $191 per month. However, fees vary widely based on location, household size, and the services covered by the HOA.
For example, census data shows that a HOA community in California is likely to require more than one in Alabama. Additionally, larger homes tend to pay less monthly fees than smaller homes when speaking in terms of square footage.
Here’s a breakdown of the country’s average HOA fees (including condominium fees):
One thing to note is that HOAs may charge fees each year. If this concerns you, ask your HOA contact or real estate agent for a copy of the relevant HOA documents. These documents describe your rights in the community and how the HOA works, including whether the HOA may charge fees in the future.
Do I have to pay additional fees?
In addition to your monthly, quarterly, or annual HOA fees, you may also have to pay special appraisal fees or fines. These are not regular payments but may appear from time to time.
HOAs should have reserves to cover planned or unplanned maintenance or repairs. However, if reserve funds are running low, the HOA may be able to impose special assessments to cover the balance.
For example, if the community plans to replace the clubhouse roof but the cost exceeds the reserves, the HOA may be able to bill residents the difference.
This authority depends on what is stated in the HOA regulation documents. Some HOAs require a community vote to exercise this power, while others do not. Review your municipality’s authoritative documents to see how your HOA may work in relation to special audits.
HOAs don’t just make community rules—they enforce them, too. A common enforcement tactic is to issue fines to residents who break community rules. This means if you paint your house the wrong color or don’t clean up your dog according to community rules, you may have to pay for it.
What happens if HOA fees are not paid?
Homeowners who fail to pay their HOA fees may incur late payment fees or interest. Access to community facilities — like the pool or clubhouse — might also be restricted. If the missing payments persist, the HOA may even be able to foreclose on the property.
If you cannot make your monthly payments, contact your HOA board or management company. They may be able to create a payment plan or other accommodation for you.
Questions to ask yourself before deciding on an HOA
If you’re considering buying a home within an HOA, remember that you’re not just buying a home — you’re also joining a community. You should understand how community rules, finances and administration may affect you.
Here are some questions you should know the answers to before you move in.
- How much are HOA fees?
- What amenities and services do the fees cover? What is not covered?
- Does the HOA have the authority to charge fees in the future?
- Is the HOA authorized to charge special audits?
You may ask your HOA contact to provide you with the minutes of past HOA meetings, which may show you previous fee increases or rule changes. HOAs are required to make these documents available to residents for inspection. You should also receive a copy of the Community Agreements, Terms and Restrictions (CC&Rs), which outline the current community rules.
Knowing the answers to these questions can help you determine if the move is within your budget. You can also use the Advanced menu on Mint’s home affordability calculator to see how HOA fees could affect your total monthly payment.
HOA Fees FAQ
Have more questions about HOA fees? Here you will find answers to some of the most frequently asked questions.
Do all condos have HOA fees?
Condos almost always have HOA fees. On rare occasions associations may become dormant, bankrupt or lose control to a majority owner, stopping them from charging fees.
While no fees sounds positive, it’s important to remember that repairs may not happen without a governing body maintaining the condominium building. This can reduce the value of units within the building.
Are HOA fees tax deductible?
If you purchase property within an HOA as your primary residence, you cannot deduct monthly or quarterly charges on your tax return. However, if you buy and use the property as a rental, you can deduct HOA fees as a business expense.
What do HOA fees not cover?
Which HOA fees are covered varies from municipality to municipality. Generally, fees cover public areas – like a clubhouse – and don’t cover your private property. This means that you are responsible for your mortgage, home insurance, repairs and maintenance.
What are HOA fees? They are periodic payments that residents of a municipality must make to the governing association. They usually cover community facilities and services like a pool or snow removal. They usually do not cover costs related to your private property, such as B. a household insurance.
If you’re moving to a HOA and don’t already have insurance, check out rates from our trusted home insurance partners.
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