Are you currently living in a condominium or homeowners association and often wonder “what do HOA fees cover?” Maybe you are looking into purchasing a new home and want to know what is covered. Or you could be a board member and not sure what you can be held responsible for. In any case, you should take the time to learn how fees work, what some of the benefits of a community association are, and when they can fall short.

What are HOA fees?

An HOA fee is typically a monthly, quarterly, or annual charge. The goal is to have a budget for solving any problems that could arise. They’re used to maintain the property, pay staff, and take care of common areas and facilities.

It’s important that residents are aware of what’s being paid and what the HOA offers. This way, they can find the best HOA community for their lifestyle and choose the one that fits their expectations.

HOA Fees

What is the average HOA fee?

These fees can be as high as $4,107/ month in a luxurious building with heavenly amenities and services. However,  a typical monthly HOA fee would be around $100-400. The technique used to design the cost of these assessments is drawn out within the Condo or HOA documents. HOA fees are often tied to the size of the home, the type of house, and community it is. Communities normally operate under the economies of scale concept, where if the entire community provides a reasonable monthly contribution, they can create a large positive effect on the community.

What do HOA fees cover?

HOA fees are essential for maintaining the condominium and preserving common areas. They are charged to ensure that the structure of the site complies not only with safety standards but also with the expectations of residents. You should know what your money is used for and what’s included in the payment of association fees.

Maintenance

The upkeep of common areas is very important. If you live in a block of apartments this could be hallways, elevators, laundry rooms, stairways, roof leaks, or driveways. In a single home HOA, this could be roads, lights, and upkeep of any shared facilities. Proper lawn care and landscaping are crucial and they can get overlooked, see more on that later.  Normally snow removal from roads and shared parking lots are also included.

Amenities

These vary widely between communities, but they could include a gym, a pool, or a business center. These amenities are often the most attractive aspects to living within a community association and they can be the deciding factor for new buyers. Residents want to be able to easily reserve these amenities, so they can plan a BBQ without worrying if it will be available. Having the convenience of a resident portal on desktop and mobile adds a lot of value to your community.

Community

You’re not just living in an isolated residence, but in a thriving community where residents are encouraged to make new connections with neighbors. There are often community get-togethers, both physically and virtually, where you can get to know your fellow residents.

Insurance

A huge plus for many is the benefit of shared insurance. This varies from community to community but normally includes all common areas. If you’re in a condo, it can also include the outside of the building. You will still need to take out your own insurance for all your possessions. Having said that, in Florida often the condominium ensures all common property, including your walls. But this won’t include your windows, appliances, and flooring. Make sure to read your community’s documents on insurance and talk to the board about what exactly they offer.

Reserve funds

A percentage of the fee is allocated to the HOA reserve fund. This is a savings account where the association can keep aside funds to deal with any unexpected expenses that may appear.

This means that, if the laundry pipes burst, the HOA will have a financial reserve to deal with these charges without having to charge the owners anything extra.

If the HOA doesn’t have a financial reserve or its finances are badly managed, then owners may have to pay a special assessment. If you choose to live in an HOA, it’s essential that you read all the rules to understand how it works and when you may be charged extra, and how much they can charge. 

Lawn Care

The use of HOA fees depends on where you live. In some HOAs, lawn care and gardening may be included in your fees. If you have your own yard, it won’t include your lawn maintenance, but it may include common area gardening. To understand how your HOA rules work, you need to read them. Some may even have garden maintenance standards, setting the maximum height of the grass, for example.

Condominium activities

Costs such as water, sewage, and waste removal are sometimes included in the HOA fees. This means that the owner of the property will have fewer bills to pay.

What else do HOA fees cover?

There are times the association fees cover pest control which is a nice benefit. Condos and HOAs also conduct periodic inspections of the property and ensure that all residents maintain their homes to a certain quality, which keeps house prices up.

What happens if you don’t pay your HOA fees?

Notification

If you don’t pay your fees on time, you will normally be notified by the HOA, telling you that you have an outstanding debt that you need to pay.

This letter or email may warn you of the consequences of not paying. These could include charging you interest until the payment is made, or even foreclosing your home.

Foreclosure

If a resident decides to stop paying the HOA fee every month, they will be banned from using any amenities. There are also legal solutions available, such as foreclosing. Residents agree to pay HOA fees when they join the community, so the board is within their rights to start legal proceedings. In some states, there are restrictions on when an HOA can start foreclosure on a resident’s property. But in states that have no restrictions, an HOA can foreclose your property for a few hundred dollars.

These measures will vary according to the HOA. There are communities that would help the owner to create a payment plan to solve the problem. It’s essential that all owners read and understand all the rules of the association. Especially around paying fees and what could happen if you don’t pay.

Are HOA fees tax deductible?

If the property is your own residence, fees aren’t tax-deductible.

However, if you purchased the house to rent it, you can deduct HOA fees as a rental expense. If you live in the home for part of the year, and rent it for the rest of the time then the fees are only a rental expense when it’s rented out.

If you find that the fees charged are more expensive than they should be, then you should join the HOA board and begin to assess what the expenses are and where the biggest expenses are.

Conclusion: What do HOA fees cover?

HOA fees are essential to keeping HOA running and looking nice. When you join an HOA you get benefits like more security, stable value of homes, and amenities. However, you have to pay for those, and that’s what HOA fees are for. If an owner doesn’t pay their fees, then the board can take legal steps against them.

Having an online communication tool makes it easier to find how much you owe in fees and how you should pay them.