There are approximately 358,000 homeowners associations (HOAs) in the United States. More than 74 million residents live in a neighborhood or condominium complex governed by one.
HOA popularity has to do with the many benefits they afford, including helping retain property values. The services they provide cost money, though, which is where HOA fees come in. Every association must determine an HOA fee structure so that they have ample funding without overburdening residents.
Below is a comprehensive guide to HOA dues importance. Keep reading for an HOA fee breakdown, so that your board can set an appropriate amount.
Grounds and Buildings Upkeep
One of the main things that HOA fees fund is the upkeep of common areas. These include things like grounds maintenance or repairs for fencing or automatic gates.
HOA dues can be used to pay for HVAC, electrical, or plumbing repairs in communal buildings. They can include fees for pest control services.
Amenities and Community Improvements
Another major category that uses HOA fees is the upkeep of neighborhood amenities. Common examples include swimming pools, tennis courts, playgrounds, and gyms.
They also can be used to pay for new community projects. If your neighborhood decides to repave private sidewalks or put in a community garden, HOA fees may be used to pay for this.
Utilities
Some communities cover various utilities for residents. While this can extend to water and electricity, it most often includes garbage or recycling pickup, or waste removal services. That is because these are often fee-based for private neighborhoods.
Insurance
HOA fees are often used to pay premiums or deductibles for insurance policies. Typical ones include property insurance for common areas or shared buildings, as well as liability insurance. The latter protects against legal claims from accidents or injuries that occur on the property.
Some HOAs also purchase insurance policies for their directors or board members. These protect against lawsuits related to HOA responsibilities.
Professional Services
HOAs also need funds for various professional services. Typical ones include lawyer fees for drafting documents or handling disputes on behalf of the neighborhood. Accounting and bookkeeping services are often necessary for tax filing and budgeting purposes.
Community Events
Another common use of homeowner association fees is for community events. Holiday parties or summer events are good examples. Dues can be used to pay for food or entertainment at events for the entire community to enjoy.
Emergency Funds
Many HOAs often keep a reserve fund for emergencies or major projects. Common uses include unanticipated repairs to roads, streets, or communal buildings.
Funds might be put aside for refurbishing property that has been vandalized or repairs that are needed beyond routine maintenance. Significant capital improvement projects can fall into this category as well.
Learn More About HOA Fees
Now that you know how HOA fees work and the services they pay for, you can determine the right level for your neighborhood or condo association. An experienced real estate management company can further advise you on how to set fee amounts.
PMI Manhattan Group is a full-service property management company. We offer a variety of real estate tools, including HOA management. Reach out to us today to see what we can do for you.
