FAQs About Condo or Homeowner Association Dues and Fees

Dues and special assessments can create uncertainty, financial strain, and disputes for homeowners in a community governed by an association.

Facing issues regarding your community association dues or fees? Others may have dealt with the same concerns.

Question: Should I avoid buying a house with high HOA fees?

My wife and I are thinking about downsizing, but many smaller homes are within existing developments governed by a homeowner’s association (HOA). They tend to have fees in the hundreds of dollars per month. We’re hoping to stay in this home well into retirement. Should we be worried that these fees will keep going up?

Answer

HOA fees represent your ongoing obligation to pitch in on the costs of building and maintaining common areas and, in some cases, parts of your own property, such as a shared roof or walls. And yes, these fees could rise, whether they are high now or not.

In fact, unusually low fees are sometimes a sign that the association hasn’t been able to talk the owners into paying for needed maintenance, repairs, and improvements. The day will come when they can’t put this off any longer, and you might have to pay whopping special assessments. Too-high fees can be a problem too, particularly if they exceed some owners’ ability to pay, resulting in disputes and foreclosures.

You’ll definitely want to do more than take the existing monthly fees at face value when considering buying. Check out:

  1. the number of owners who are, in fact, paying the fees they owe (if more than 15% of them aren’t, the HOA may be in trouble already)
  2. the dollar amount the HOA has in reserve (it will need money to draw on if a sudden repair or emergency arises)
  3. under what circumstances the HOA can impose special assessments or other fees, and whether it has done so recently, and
  4. whether the HOA is embroiled in any financial or legal disputes, or soon will be.

How do you find out such things? First, review the master deed or "Covenants, Conditions, and Restrictions” (CC&Rs). Then talk to other owners, read minutes from recent HOA meetings, and follow up on any unsettling information.

Question: How do I find out whether my HOA dues might go up?

I can only just afford the monthly dues at my HOA now. Should I be worried that they'll rise dramatically?

Answer

The answer to whether HOA dues might rise is almost always “yes.” But how soon, and by how much? For useful indicators, take a look at the development’s amenities, current condition, and financial statements.

Looking around the development can provide clues. An older development, for example, might contain a clubhouse with dated decor, parks with worn-out landscaping, or playgrounds built over a decade ago. The HOA will likely need to increase dues to keep up with their maintenance, repair, and replacement costs.

Even a newer development, however, can be expensive to maintain. Quality of construction is a big factor. If, for example, you see peeling surfaces and poor insulation in the clubhouse or inferior equipment in the exercise room, you can expect higher operation, maintenance, and repair costs going forward.

Get a copy of the HOA financial statements from your real estate agent (if you are a potential buyer and using an agent) or directly from the HOA. Reviewing these will tell you how often and by how much the HOA has hiked dues in the past, which helps indicate (though in no way guarantees) what kind of future increases to expect.

Also look at whether the HOA has consistently met its maintenance budget through dues, and whether it has money in reserve. The reserve is typically funded from amounts set aside from the periodic dues, based on estimates of future needed repairs and replacements. By studying the HOA’s financials, you can also determine whether the money coming into the HOA from homeowners is at least equal to the money going out for ongoing maintenance.

Some HOAs fail to collect enough dues to meet ongoing expenses, often because of balking homeowners or because the board of directors is reluctant to raise dues (maybe having promised not to do so if elected). Some dip into the reserves to pay for maintenance (rather than raising dues or levying a special assessment), such that even a once-adequate reserve account will be quickly depleted without a dues increase.

If the HOA has been running in the red, or has delayed needed common area maintenance and repairs, this is a warning flag. To prevent the development’s common areas from going to ruin, the HOA will likely need to raise dues soon (and possibly significantly) or levy a special assessment.

By taking a good look at the HOA’s financials, as well as at common areas in the development, you'll get some idea of what to expect regarding future dues. If you have questions, or need help reviewing the financials, contact a real estate professional in your area.

Question: What if I don't pay the HOA special assessment?

I live in a planned development and my homeowners’ association (HOA) just billed me for a $500 special assessment. This one, they say, is to resurface the tennis courts. I don’t even play tennis! What if I just refuse to pay?

Answer

Although it might seem unfair, as a homeowner in the development you must pay your portion of the HOA expenses. If the tennis courts are common areas that your HOA must maintain, you are obligated to pay your share whether you play tennis or not. Exactly how far the HOA’s powers extend to impose special assessments, and what the HOA can do if you refuse to pay, depend on your development’s governing documents.

Special assessments usually come up when an HOA hasn’t collected enough money in periodic dues from owners to keep up with repair and replacement of common areas, or due to unforeseen damage (such as if the tennis court surface wore out well before its expected life span).

Reviewing the governing documents should tell you whether the HOA acted within its powers and followed all requirements in imposing the special assessment. For example, if the HOA must obtain a majority vote of the members prior to any special assessment, and did not, you might refuse payment and challenge the assessment’s validity.

What the HOA can do by way of enforcement is also determined by the governing documents. The HOA probably has the power to assess late fees and fines on any unpaid amounts. Some HOAs' governing documents allow it to prohibit a homeowner from using any common area until all dues and fees are paid up. Additionally, some governing documents give the HOA the right to place a lien on a delinquent owner’s property.

Because the consequences of nonpayment can be harsh, your best course of action might be to pay up. If payment outright will strain your budget, talk to your HOA about a payment plan. If you foresee continued problems with such assessments, consider moving to another community with no HOA.

Question: Should my HOA have to pay for my wheelchair ramp?

My husband suffered a permanent injury and now must use a wheelchair to get around. My subdivision has rules that require any exterior improvements to houses be approved by the homeowners’ association. I received the approval, but the HOA refuses to pay for the ramp. Under the Fair Housing Act, doesn’t it have to pay?

Answer

The Fair Housing Act (“FHA”) prohibits discrimination by a homeowners’ association (“HOA”) against someone because of race, color, national original, religion, gender, familial status, or disability. For example, an HOA cannot enforce its rules and regulations differently against a blind person. The FHA, however, doesn’t require an HOA to pay for all disability-related improvements in a subdivision.

In cases like you describe, the FHA requires that HOAs allow reasonable changes that allow a disabled person to equally use and enjoy the premises. The answer to whether the HOA needs to pay for that improvement, though, will come down to whether the change, in your case a wheelchair ramp, is considered an “reasonable accommodation” or a “reasonable modification.”

A reasonable accommodation is a change in rules, policies, practices, or services that allows a disabled person an equal opportunity to use and enjoy a house or common area. For example, if your HOA has a rule against designated parking spots, it may nonetheless be required to provide a handicapped spot for disabled people. Any expense incurred as a result of your HOA accommodating the request to change its rules is paid by the HOA.

An HOA isn’t required, though, to make an “unreasonable” accommodation; that is, one that imposes an undue financial or administrative burden on the HOA, or fundamentally alters the nature of the HOA’s operations. For example, a request to install an elevator to access an exercise room may be an undue financial burden, especially in a small subdivision with a small budget.

A reasonable modification, on the other hand, is a structural change to the existing premises that allows a disabled person the full enjoyment of a house or common facility. The modification must be related to the disability and must be reasonable. In other words, an HOA won’t need to allow a wheelchair ramp for a deaf person who doesn’t have a mobility-related disability. Reasonable modifications are made at the expense of the property owner.

So, while your HOA may need to allow you to construct a wheelchair ramp to allow your husband access to your house, you’ll in all likelihood have to pay for the ramp. And you may also be required to remove the wheelchair ramp when you move.

Other rules and laws may apply. Look into whether your state imposes any additional requirements or obligations on your HOA. And, become familiar with the governing documents that apply to your HOA, such as the bylaws and CC&Rs, so you can be sure the HOA board isn’t avoiding any specific obligations it has under those documents.

Question: I inherited an HOA property: Do I need to pay a new owner's fee?

My brother and I inherited our father’s home in a planned community. My husband and I bought my brother’s half from him. We’ve been living there and paying HOA dues for months. Now the HOA says we owe a “new owner’s” fee of $200. Can the HOA really make us pay this?

Answer

You need more information. First, find out why the HOA is charging the fee. Did the fee arise from the inheritance, or from the transfer from your brother? You must also find out what provision in the documents governing your development the HOA is relying on to assess the fee.

To be a valid HOA charge, your development’s Declaration of Covenants, Conditions, Restrictions and Easements (CC&Rs), or the HOA’s bylaws must grant the HOA the authority to assess it. Ask the HOA what provisions authorize the new owner’s fee. If there are none, it might be invalid.

Also check the fee’s validity under your state’s laws. Some state’s laws prohibit certain types of HOA fees, or restrict the amount HOAs can charge.

Even if the HOA has the authority to charge the new owner’s fee, whether the charge is applicable in your case depends on the purpose of the fee.

HOA transfer fees are usually meant to compensate the HOA for its time and expense in assisting with the home’s purchase and sale. For example, an HOA might provide a buyer with copies of the development’s governing documents, HOA financial statements, or documentation of outstanding dues, fees, or HOA liens on the home.

In your case, this type of fee should not likely apply. Inheritances are usually excluded from transfer fees, because the HOA is not involved, and puts in no time or expense to assist with the transfer. The same goes for the transfer from your brother to yourself and your husband; your HOA probably did not assist, or incur any expense, in the transaction.

If the fee is for some valid purpose other than compensating the HOA for its assistance, you might still argue that since you only received one-half interest in the property during the conveyance, you should only owe one half the fee.

After researching the matter, if you believe the fee is invalid (or should be reduced), meet with the HOA’s board of directors (bringing a copy of the relevant laws or provisions) and calmly present your position. Hopefully, the HOA will agree, and remove the charges.

Unfortunately, HOAs are not always swayed by logic, and your HOA might not agree to remove the fee. Refusing to pay, however, is not a good option. Most HOAs have the power to assess penalties against a nonpaying owner, and can even place a lien on the home.

Hiring an attorney to write an opinion letter or to initiate legal action might help change the position of the HOA. Unfortunately, you’d probably spend more money hiring legal help than you would just forking over the fee.

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