Lakewood Ranch (941) 359-1134The Most Common Questions About HOA Fees
If you’re on an HOA board, then you probably expect people to ask you about HOA fees. After all, some people have never lived in an HOA before and they don’t understand the thinking behind the fees.
Here are some easy answers you can give people when they ask you about HOA fees.
What Are HOA Fees?
HOA fees are billed monthly, biannually, or annually, depending on how your association is set up. These fees go directly in the HOA’s operating fund. Sometimes, a portion of them go into a reserve fund, so the HOA has money set aside for emergencies or for a rainy day.
Homeowners are informed about HOA fees when they buy a new home in an area covered by an HOA. However, the fees can come as a surprise if a realtor does not point them out to a buyer or if the buyer doesn’t understand the process.
Why Do We Need HOA Fees?
It is part of the HOA’s job to do things like keeping community areas in good shape, maintaining any swimming pools in the neighborhood, keep up a clubhouse or exercise area (if the HOA has them), paying for security for the neighborhood, etc. If you live in a condo complex, the HOA will need to do more things, like take care of common roofs, balconies, and more.
All of this takes money, which is where the fees come in. Each homeowner participates in the association by contributing fees every month or every year.
How are HOA Fees Determined?
The fees are usually worked out backwards from the budget. The HOA will determine how much money it needs each year, then work backwards to determine how much each household owes and how much it should pay per month.
If the HOA has a budget of $150,000 dollars for the year and there are 100 homes contributing, then each homeowner will need to pay $1500 for the year. You can split that up into 12 monthly payments of $125.
Are HOA Fees Too High?
It can be hard to tell if HOA fees are too high. Make sure that your association has a budget that anyone can examine and that they are audited by people from outside every few years. This helps discourage fraud.
HOA fees may seem higher than they need to be because of inflation. Services that used to cost $100 may now cost $150 or even $200!
If you think that fees might be too high, talk to your board or join the board. You may find places to make cutbacks or you may find that the fees are actually appropriate.
What Happens When Someone Doesn’t Pay Their HOA Fees?
Different associations have different consequences for people who do not pay their fees. These can include:
Late fees
Restricted privileges
Lawsuits
Liens
Foreclosures
Make sure people understand these consequences and that they can avoid them by paying their fees on time!
If you have questions about how to set or how to understand HOA fees, contact us at AMI today!