Are HOA Fees Monthly or Yearly? A Breakdown

Homeowners Association (HOA) fees are financial contributions made by property owners within planned communities, such as condominiums, townhouses, or some single-family neighborhoods. These fees fund the maintenance, management, and enhancement of shared areas and services that benefit all residents. They ensure the upkeep of the community’s common property.

How HOA Fees are Typically Structured

HOA fees are commonly structured as monthly payments to ensure consistent cash flow for ongoing operational expenses and routine maintenance. While monthly payments are predominant, some homeowners associations may collect fees quarterly, semi-annually, or on an annual basis, depending on the community’s bylaws and financial management practices. Fees are typically due on the first of each month. Many HOAs offer a grace period, often between 10 to 15 days, before late fees or penalties are applied.

What HOA Fees Cover

HOA fees cover a wide array of expenses and services designed to maintain and enhance the community’s shared spaces and overall quality of life. These funds contribute to the upkeep of common areas, which can include landscaping, swimming pools, clubhouses, fitness centers, and private roads within the community. Utilities for common areas, such as water for irrigation or electricity for shared facilities, are also covered.

A significant portion of fees goes towards master insurance policies that protect shared structures and common property, distinct from individual homeowner’s insurance. Additionally, fees fund reserve accounts, which are savings set aside for future large-scale repairs or replacements of major components like roofs or pavement. Administrative costs, including professional management company fees, legal services, and accounting, are also financed through these contributions.

How HOA Fees are Determined and Adjusted

HOA fees are primarily determined by the association’s board of directors through an annual budgeting process. This budget estimates all anticipated operating expenses for the upcoming fiscal year, encompassing maintenance, utilities, insurance, and administrative costs. A reserve study, often conducted by external professionals, assesses the physical condition and projected lifespan of common assets.

This study helps the HOA plan for the long-term capital expenditures necessary to repair or replace major components, aiming to prevent underfunded reserves. Fees can be adjusted periodically due to factors such as inflation, increasing utility costs, unexpected repairs, or changes in the level of services provided. In situations where reserve funds are insufficient for unforeseen or large-scale projects, HOAs may levy special assessments, which are additional charges to homeowners.

What Happens When HOA Fees are Not Paid

Failing to pay HOA fees can result in escalating consequences for the homeowner. Initially, late fees and interest charges are applied to the overdue balance. If payments remain delinquent, the HOA may suspend access to community amenities.

For continued non-payment, the HOA has the legal right to place a lien on the property, which is a claim against the home’s title. This lien must be settled before the property can be sold or refinanced. In prolonged delinquency, and as permitted by the community’s governing documents and state law, the HOA may initiate foreclosure proceedings to recover the outstanding debt. Actions are outlined in the HOA’s governing documents, such as the Covenants, Conditions, and Restrictions (CC&Rs).