Posted by IKO Community Management on September 21, 2017 at 9:00 AM
For more information about why residents pay the HOA board every month, where the payment goes, and more, check out IKO Community Management’s rundown:
According to Realtor.com, the average HOA fee (also known as a due) was between $200 and $300 per month for a single-family home last year. The exact number is dependent on how many community amenities are offered, the size of units, and so on.
Where do your HOA fees go?
The HOA fees are typically divided into two parts. One portion goes toward monthly expenses of the community and the other portion goes into a reserve account.
What does a reserve account cover?
Fiscally responsible homeowners associations offer a reserve account within their annual HOA budget to cover long-term expenses like repairs and replacements for roofs, plumbing, heating and cooling appliances, exterior paint, and more. They also cover emergency expenses that arise when natural disasters, vandalism, and unavoidable wear and tear occur.
What happens when an HOA depletes the reserve account?
In some of the cases mentioned above, the HOA board may have to deplete the reserve account to cover expenses that homeowners insurance didn’t cover. When this happens, the board may ask residents to pay a special assessment bill, which is higher than the average monthly HOA fee.
Fortunately, these assessment bills are only temporary until the reserve fund is back to a comfortable level, according to the HOA board.
Aside from the reserve fund, what do the monthly fees pay for?
Depending on your homeowners association-regulated community, your HOA fee will mainly go toward basic community amenities and services like the following:
- Community pool, gym, and locker room management
- Common area landscaping and maintenance, including pest control and parking lot paving
- Towing services
- Common area energy bills, including heating and cooling, plumbing, lighting, cable/Internet/Wi-Fi, and water
- Homeowners insurance
- Playgrounds and tot lots
- Walking trails
- Dog parks
- Rentable spaces with kitchen (community center, fireplace/fire pit, party/craft room)
- Snow removal
- Trash and recycling pick-up
- Emergency service
Other communities may also offer high quality amenities and services such as the following:
- Front desk and concierge services
- Valet parking
- Common area and home security systems
- Spa and/or health club
- Laundry services
- Golf course
- Community management services
Find other high-rise amenities that are in demand like bike racks and storage rooms in IKO’s What Are The Latest And Greatest High-Rise Amenities?
What happens if you don’t pay your HOA dues?
According to AllLaw.com, one of the first do-it-yourself legal sites, "If a homeowner does not pay the required assessments, the HOA may choose to try to collect those dues through normal collection processes, such as collection calls and letters; by filing a civil suit to obtain a personal judgment against the homeowner; or by initiating a foreclosure."
Check out IKO Community Management’s How To Avoid Getting HOA Fines When You’re On Vacation for more tips.
What should you ask your HOA board in regards to fees?
When you’re looking for a new home or condominium in a community that requires its residents to pay a monthly fee, ask the board these important questions, as the amount varies from neighborhood to neighborhood:
- What amenities and services are included in the monthly fee?
- Have you ever had to deplete the reserve fund? If so, for what?
- Do you anticipate increasing or decreasing the fee any time soon? If so, why?
For more information about homeowners associations and how they handle finances in sticky situations, download IKO’s Top Problems HOAs Face (And How To Fix Them) by clicking on the button below: