What Do Homeowners Association Fees Cover?
Gain clarity on Homeowners Association fees. Understand their role in sustaining community value and shared living.
Homeowners Association (HOA) fees are regular financial contributions made by property owners within planned communities. These payments are designed to collectively manage and maintain the shared aspects and amenities of the community. Understanding these fees is important for anyone considering a property in an HOA-governed area, as they represent an ongoing financial commitment beyond a mortgage and property taxes.
Maintenance of Common Areas and Amenities
HOA fees cover the upkeep of common areas and facilities. This ensures shared spaces are well-maintained and functional for all residents. Examples include professional landscaping for community grounds, maintenance of shared recreational facilities such as swimming pools, clubhouses, and fitness centers, along with playgrounds.
HOA fees also cover the upkeep of private roads, sidewalks, and common area lighting. Additionally, a portion of the fees may cover shared utility costs for these common elements, such as water for irrigation, electricity for common area lighting, and sometimes trash and snow removal services. These allocations ensure the community’s shared environment remains appealing and accessible.
Operational Costs and Reserve Funds
Beyond physical maintenance, HOA fees fund the administrative and financial management of the association. This includes fees for professional management companies that handle day-to-day operations, along with legal and accounting services. Community insurance policies, such as master property insurance for common structures and liability insurance for shared areas, are also paid from these funds.
A portion of fees contributes to administrative supplies, communication expenses like newsletters or community websites, and sometimes costs associated with community events or security services. Separately, reserve funds are a crucial component, acting as a savings account for major, infrequent repairs or replacements of common property elements.
These funds are allocated for large-scale projects like roof replacements on common buildings, resurfacing of private roads, or significant repairs to community infrastructure such as major plumbing or electrical system overhauls in shared facilities. Maintaining adequately funded reserves helps communities avoid large, unexpected special assessments, which are additional charges levied on homeowners to cover such costs when reserves are insufficient. Many associations aim to keep their reserve funds between 70% and 100% funded based on professional assessments.
Exclusions from HOA Fee Coverage
While HOA fees cover a broad range of shared community aspects, homeowners remain responsible for many expenses related to their specific property. HOA fees do not include the maintenance and repairs of the individual homeowner’s private dwelling. This means costs for items like roof repair on a single-family home, interior plumbing issues, or appliance repairs within a private unit are the homeowner’s responsibility.
Property taxes are also not covered by HOA fees and must be paid separately. Personal homeowner’s insurance for the individual unit or home is another distinct expense, differing from the HOA’s master policy. Personal utility bills for the individual unit, such as electricity, water, gas, and internet, are the homeowner’s direct financial obligation. Landscaping or maintenance within a private yard is also typically excluded, unless specified in the community’s governing documents.