Over 370,000 homeowner associations (HOAs) exist in the United States. Arizona alone has over 9,000 HOAs with hundreds of thousands of residents.
Millions more people reside in households within HOAs. There are several benefits to living in an HOA community. They include enhanced property values, mediating any neighborly disputes, access to quality amenities, and plenty more.
However, the most commonly associated characteristics of HOAs are the fees and assessments homeowners must pay.
We have broken down the four major different types of HOA assessments and fees that are common in HOAs and what they mean for you.
If you belong to an HOA, you are going to be required to pay a HOA fee. This fee can either be billed on a monthly or annual basis.
What do HOA fees cover?
These established fees go toward the HOA’s yearly budget to cover regularly occurring operating expenses. These expenses include things like landscaping, maintenance of community amenities, snow removal, and any other expected expense.
Another portion of the monthly or annual HOA fees go toward the HOA reserves account. This is money saved for a rainy day for repairs or replacements that may happen only once every year or few years, such as repaving streets or other repairs. The HOA fee can also cover bigger ticket items such as roof repairs if you live in a condominium complex.
HOA fees can also be used for enhancing the overall neighborhood or condominium complex by adding in popular amenities like a tennis court or building a pool. These can be costly items. Many times, the HOA will budget for a planned expense like this.
Every HOA usually has a set of legally binding bylaws that must be followed. HOAs are allowed to hand out fines to homeowners for violating the bylaws and rules.
Examples of HOA bylaws include things like the color you are allowed to paint your house, exterior renovations or additions to your home, types of holiday decorations you are allowed to use, how long the trash is allowed to be outside waiting to be collected, and whether or not certain vehicles like RVs are allowed in your driveway.
Depending on the HOA, some types of pets are not allowed to live in your home. These can include certain breeds of dogs and other reptiles.
Most HOAs also strictly forbid the renting out of your home on popular home0sharing websites, like Airbnb and VRBO. You can reasonably expect to receive a HOA fine if you are caught doing this.
If you do violate any of your HOA rules or bylaws, one of two things will happen. Either you will receive a warning letter describing the extent of you violation with a set deadline for correcting it. If you don’t fix it by the set deadline, you will most likely receive an official fine.
Some HOAs however do not send a warning letter. They go directly to sending out to the homeowner a fine that must be paid. If fines are not paid by the deadline, the fine will usually go up by amount every day thereafter.
It is important you check your HOA operating procedures on how they hand out fines. This can save you time and money in the future should you unwittingly violate a rule.
HOA Special Assessments
HOA special assessments are additional payments made by homeowners on top of their usual monthly or annual HOA fees. Special assessments are unexpected costs that were not budgeted for. These are usually one time expenses as well.
While special assessments are unexpected, homeowners living in an HOA are still legally bound to pay them.
Most HOA boards understand special assessments can be a burden on homeowners and should not make use of using them often.
HOA Lien-Based Assessments
HOA lien-based assessments are the most serious of HOA fines. They only occur after a homeowner refuses to pay charges and repeatedly fails to follow HOA rules and regulations.
If a homeowner receives a lien-based assessment, the HOA has the authorization to put a lien on the home. This could possibly force the homeowner into foreclosure.
However, these types of HOA assessments are usually pretty rare. Not every state allows for HOAs to hand out lien-based assessments.
Who Decides the HOA Assessments and Fees?
Every HOA has an elected board made up of homeowners within the neighborhood or condo complex. These board members are volunteers. They must follow an official set of bylaws for determining the structure for fees and HOA assessments.
Elected HOA boards can often decide to partner with a professional property management company or group to help assist with the day-to-day business of running an HOA.
These property management groups can take the heavy burden off volunteer homeowners who may not be as knowledgeable about fees, fines, and HOA assessments as professionals.
Hiring a property management group can help with a variety of HOA related services, such as accounting, maintenance, administrative management, and more.
Need More Information on HOA Assessments and Fees?
HOAs can be very beneficial to the nearly 53 percent of American homeowners who reside in them. HOAs can be a tricky business for those homeowners unfamiliar with the business of running an HOA.
If your HOA is in need of professional assistance, reach out to the team at PMG Services.
We can help you manage your HOA smoothly so you can stop focusing on the small details of fees and HOA assessments and instead focus on big picture improvements for your community.
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