In every neighborhood association, homeowners must pay HOA fees. These fees play an important role in the successful operation of a community. Failure to pay these fees can result in a number of consequences.
What Are HOA Fees?
When a person buys a home in an HOA community, they agree to fulfill certain obligations. One of these obligations is to pay HOA fees regularly.
What is the HOA fee anyway? An HOA fee is the fee homeowners in an HOA pay the association. The association then uses the fees it collects to pay for various expenses, such as maintenance and upkeep, insurance, and landscaping.
Fees go into an operating account. In many associations, some of the fees also go into a reserve account, which is used for major repairs and replacements.
Are HOA Fees the Same as HOA Dues?
Homeowners may encounter the term “HOA dues” as well. What are HOA dues? HOA dues are the same as HOA fees. They are two interchangeable terms.
However, HOA dues and HOA fees differ from special assessments. A special assessment is an extra fee that homeowners may need to pay sometimes. The association usually collects this extra fee when additional funding is required. It is also worth noting that homeowners associations don’t often levy special assessments.
What Do HOA Fees Cover?
It is important to understand that HOA fees can cover a wide range of items. Homeowners associations may also differ in how these fees are allocated in the budget. That said, some expenses are more common than others.
In general, here are what HOA fees cover:
- Common area maintenance and repairs
- Landscaping
- Insurance premiums
- Utilities
- Pest control
- Security
- Professional services (management, accounting, etc.)
- Reserves
How Much Are HOA Fees?
An HOA board typically calculates HOA fees depending on the operating budget. The board plans the budget for the year, anticipating expenses based on current needs, historical data, and economic conditions. If an HOA maintains a reserve fund, the budget must reflect reserve contributions.
From the anticipated budget, the HOA board determines how much each homeowner must pay in HOA fees. In some communities, the HOA board divides the budget evenly among all homeowners. Other communities allocate the budget depending on what the homeowners and BOD have agreed upon.
Typically, the association’s governing documents contain guidelines on determining and allocating HOA fees. Board members must strictly follow the requirements within the governing documents to fulfill their fiduciary responsibilities.
How Much Are Average HOA Dues?
No two homeowners associations are exactly alike. Therefore, there is no one-size-fits-all number when it comes to HOA dues. One association may charge a higher fee than another.
Several factors can influence HOA dues:
- Needs. An association with more complex needs will naturally have more expenses. For instance, an HOA with many common amenities will require more maintenance and upkeep than one with only a few.
- Location. A community that resides in a wealthier area likely collects a higher fee. This is because wealthier associations usually have more facilities and higher property values. Vendors in the area also tend to charge higher rates.
- Economic Factors. Inflation, rising wages, and increasing costs of goods and services can all directly impact HOA fees.
On average, though, HOA fees fall between $200 and $300 monthly. That said, fees can also go as high as $1,000 or more, particularly in wealthier neighborhoods.
Can an HOA Raise Dues?
Homeowners association fees can go up over time. In fact, fees increase more often than not every year. However, a couple of things may hinder an HOA from raising dues.
The first are state laws. In a few states, HOAs have certain restrictions when increasing fees. In Texas, however, there is no limit on how much or how frequently an HOA may raise fees. That said, if the HOA board wants to increase dues, they must do so in an open board meeting.
The second is an association’s governing documents. The CC&Rs and bylaws, in particular, may contain limitations on dues increases. As such, in addition to state laws, an HOA board should check its governing documents before raising fees.
What Happens If You Don’t Pay HOA Fees?
Homeowners are required to pay HOA fees monthly, quarterly, or yearly. Failure to fulfill this obligation can result in several possible penalties, which can vary from one association to another, depending on state laws and the governing documents.
Some of the most common consequences of not paying dues include the following:
1. Late Fees
The association typically charges a late fee when a homeowner stops paying dues. This late fee can accumulate as an owner’s dues remain unpaid.
2. Suspension of Privileges
In some communities, homeowners may have their privileges temporarily revoked if they fail to pay their fees. This could range from losing access to common facilities to losing voting rights.
3. Collection Agency
An HOA board may refer a delinquent account to a collection agency. This agency will then assume the obligation to collect the unpaid fee, either charging a flat rate for the service or taking a percentage of the collected amount.
4. Lawsuits
If the law permits it, an association may sue a homeowner for nonpayment of dues. Given the right ruling, a court may allow the HOA to garnish the owner’s wages to recover the amount due.
5. Liens
Another way to collect an owner’s debt to the HOA is to place a lien on the home. With a lien, an owner can’t sell their home without first settling the lien.
6. Foreclosure
With a lien in place, an association can choose to initiate foreclosure proceedings. This means an HOA can sell the debtor’s home to satisfy the lien and settle the amount owed. Before foreclosing, an HOA board should check state laws, as some states have strict rules on the requirements and manner of foreclosure.
What Is an HOA Fee? Explained!
A community association can’t function without HOA fees. If homeowners wish to maintain their standard of living, enhance curb appeal, and preserve property values, they must pay these fees on time.
Calculating and collecting HOA fees can come as a challenge. Let 88 Doors help your community. Contact us online or call us at (512) 348-8821 to ask for a quotation today!