What do HOA fees cover and how do they work?

A mother and father hold the hands of their toddler as they walk past brick houses in their neighborhood where they pay HOA fees.Image: A mother and father hold the hands of their toddler as they walk past brick houses in their neighborhood where they pay HOA fees.

In a Nutshell

HOA fees are regularly paid dues that help maintain a community’s amenities. The amount you’ll pay will vary depending on where you live and the services provided. Not all neighborhoods have HOAs.
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When you shop for a home, you may look in communities that are part of a homeowners association, or HOA.

These organizations govern the appearance, maintenance and upkeep of private communities like condominiums or suburban neighborhoods. HOAs are generally subject to state regulation.

Membership in an HOA usually includes regular dues or fees to pay. HOA fees help maintain common areas of the property and provide certain amenities for its members.

HOA fees are an added expense on top of your mortgage, and you may wonder if they’re worth paying. Before you buy a new home, it’s important to understand how the HOA works, what your HOA fees would be and any rules and regulations you may have to abide by as a member. 

Why do HOAs exist?

A homeowners association, or HOA, is an organization formed to maintain a common area, neighborhood or development for residents of that community. You’ll often pay a fee directly to the HOA to help maintain the community and add new amenities.

HOAs may have bylaws or rules stating what property owners can and cannot do under the agreement. It’s a good idea to review an HOA’s rules before you purchase a home in a planned community.

It’s important to understand that there’s no national standard for HOA communities. Not every neighborhood will have an HOA, but if it does, you may be required to join and pay the HOA fees. 

What are HOA fees and how do they work?

Homeowners association fees may apply if you live in properties such as a condominium, townhouse or planned development. These are regularly paid dues — usually collected monthly or annually — charged to each homeowner to maintain the property or neighborhood for all residents.

The bottom line is that the purpose of HOA fees is to help ensure that homeowners maintain the value of their property.  

How much are HOA fees?

There are no national standards for HOA fees, but they often cost between $200 and $300 per month.

These fees are a separate cost on top of your monthly mortgage payment, so you’ll always want to factor in HOA fees before buying a house

What do HOA fees cover?

HOA fees usually cover two things: the monthly expenses needed to maintain the agreed-upon areas of a building or neighborhood — and a reserve fund.    

The monthly expenses can include items like:

  • Maintaining the swimming pool
  • Landscaping
  • Security cameras or services
  • City services such as water, sewage and trash removal

The reserve fund is usually saved for special projects, such as a new pool or new playground equipment. This fund can also be used for necessary repairs in the event of vandalism or a natural disaster.

What happens if I don’t pay my HOA fees or follow HOA rules?

In addition to paying monthly or annual fees, your HOA membership will come with certain bylaws and “covenants.” These are generally rules, guided by state law, that members must follow. They also provide rules and procedures for HOA meetings and elections.

For instance, the covenants may include guidelines about how residents should maintain their property. They may also include guidelines around whether you can rent out your property or how many people can live in your home.

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

If you stop paying your HOA fees, you can face serious repercussions. Your HOA will likely send you several letters demanding payment, and if they don’t receive your dues, your access to certain amenities could be restricted.

If enough time goes by and you still haven’t paid your fees, the HOA may file a lien on your property, which means you can’t sell your home until the HOA fees are paid. In extreme situations, they may even pursue foreclosure on your home. 

What happens if you don’t follow the HOA rules?

Occasionally, homeowners may be tempted to ignore certain HOA rules, hoping the HOA doesn’t find out or do anything about it. However, your HOA may take steps to enforce the rules if you break them.

  • Issuing you a fine for violation of the bylaw
  • Suspending your right to use certain amenities, like the pool or fitness center
  • Placing a lien on your property
  • Suing you for violating the bylaw

What’s next?

The best way to prevent being late or defaulting on your HOA fees is to make sure you can afford those expenses before you buy the home. Your HOA dues are an additional fee on top of your monthly mortgage payment, so you want to be sure you can afford it.

If your HOA fees are due annually, consider saving up for these expenses throughout the year. That way, when your annual fees are due, you won’t be caught off guard. If you do fall behind on your HOA fees, try contacting your HOA and attempt to work out a payment plan.

About the author: Jamie Johnson is a Kansas City-based freelance writer who specializes in finance and business. She covers a variety of personal finance topics, including building credit, credit cards, personal loans and student loans… Read more.