Homeowners Association (HOA) Fee: Meaning, Overview and FAQs

What Is a Homeowners Association (HOA) Fee?

The term “homeowners association (HOA) fee” refers to an amount of money that must be paid by certain types of residential property owners every month to their homeowners associations (HOAs). These fees are collected to assist the association with maintaining and improving properties.

HOA fees are almost always levied on condominium owners, but they may also apply in some neighborhoods of single-family homes. HOA fees may also go by the term “common charges” or “maintenance charges.”

Understanding Homeowners Association (HOA) Fees

Homeowners associations are organizations that are designed to set up and enforce rules for certain properties and the residents who live in them. These groups are typically created in planned communities, subdivisions, or condo buildings. People who purchase these properties automatically become members of the association. As such, they are required to pay their dues through monthly fees, which are called homeowners association fees.

HOA fees paid by condo owners usually cover the costs of maintaining the building’s common areas, such as: 

• Lobbies
• Patios
• Landscaping
• Swimming pools
• Elevators

Fees may also cover some common utilities, such as water/sewer fees and garbage disposal. The association may also levy special assessments from time to time if its reserve funds (funds set aside for major and/or emergency repairs) are not sufficient to cover a major repair, such as a new elevator or roof.

These fees can also apply to single-family houses—especially town houses—in certain neighborhoods, particularly if there are common amenities like tennis courts, a community clubhouse, or neighborhood parks to maintain.

HOA fees tend to vary drastically, depending on the property or community. The fees range anywhere from $100 to $1,000 per month. The average, though, tends to be from $200 to $300 per month. The general rule that applies is the more services and amenities, the higher the fees.

Special Considerations

If a member fails to remit payment to the HOA, it affects the other members of the community. Common areas may suffer due to lack of funds, or other members may be assessed special fees to cover maintenance costs or other expenses.

The HOA has the authority to take action against delinquent homeowners. The actions depend on the contract between the HOA and the homeowner. Some contracts dictate that the HOA can charge late fees to the homeowner, while others allow the HOA to initiate a lawsuit, place a lien on the property, or foreclose on the owner’s property to collect the delinquent payments.

Criticism of HOA Fees

The main problem that people have with HOA fees is the cost. As mentioned above, they can range from a few hundred to a few thousand dollars each month. This is, of course, based on the type of property and the amenities involved. Paying monthly fees on top of mortgage payments and other costs, such as utilities, can put financial pressure on property owners.

Owners may even face higher fees if the reserve fund isn’t properly managed. Remember, these are funds that are set aside for unexpected and/or major repairs to the property. And the HOA’s board and/or management have a fiduciary duty to make sure that their reserve funds are maintained and managed properly.

HOAs also create rules related to parking or the use of common areas. In neighborhoods with single-family homes, the HOA may create rules on how often members can paint their houses, which types of fences they may have, how they must maintain their landscaping, and any other related issues. This can often ruffle feathers and create legal hurdles for both the associations and homeowners.

The Bottom Line

HOA fees are charges levied on owners of many condominiums, co-ops, and certain neighborhoods. These fees cover the maintenance and upkeep of common areas such as shared hallways, elevators, lobbies, and parking lots. It will also usually cover snowplowing, gardening, and damage to common areas. Owners of condos should be aware of HOA fees when computing their monthly expenses.