What Is a Second HOA Fee and Why Do I Have to Pay It?

Homeowners associations (HOAs) charge fees for shared community amenities and services like landscaping and common area upkeep. While a single HOA fee is standard, some properties have more than one mandatory association charge. This layered fee structure arises from various organizational setups within a larger development.

The Nature of Layered Homeowners Association Fees

A “second HOA fee” is an additional mandatory charge beyond a property’s primary homeowners association fee. This often occurs in communities with multi-tiered governance structures, where different associations manage distinct aspects of the development. Each fee corresponds to the maintenance and governance of different common areas or services.

One common scenario involves a master association and sub-associations. A master association governs overall common areas of an expansive development, such as main roads or large parks. Smaller sub-associations manage more immediate common elements, like individual condominium buildings or specific neighborhoods. Property owners pay fees to both their sub-association and the master association, reflecting different levels of service.

Another structure leading to additional fees involves special districts, often termed Community Development Districts (CDDs). These governmental or quasi-governmental entities fund and maintain infrastructure and services within a development. CDD fees cover large-scale infrastructure projects like roads, sewer systems, and stormwater management. Unlike HOA fees, CDD assessments may appear on property tax bills and are often tied to long-term bond debt incurred for infrastructure development.

Financial Implications for Property Owners

A second or additional HOA fee increases the total monthly or annual cost of homeownership. These fees are in addition to mortgage payments, property taxes, and insurance premiums, significantly impacting a property owner’s budget. Prospective buyers must factor in all applicable fees when assessing a property’s overall affordability.

Each distinct fee can increase independently, based on its association’s financial needs and management. Owners must adhere to payment schedules for every applicable association, as failure to pay can result in late fees, property liens, or even foreclosure. Understanding these combined costs is essential for accurate financial planning and determining if a property aligns with one’s long-term financial capacity.

Discovering and Confirming Additional Fees

Prospective homebuyers should proactively inquire about all applicable homeowners association fees during the property search. It is important to ask specifically if there are any additional or layered fees beyond a single primary HOA charge. This inquiry helps uncover any multi-tiered structures early on.

Several key documents provide comprehensive information about all associated fees during due diligence. Sellers are often required to provide HOA disclosure statements, detailing all fees, including any special assessments or pending increases. Reviewing the Covenants, Conditions, and Restrictions (CC&Rs) or other governing documents is essential, as these outline the organizational structure, financial obligations, and responsibilities of all associations.

Examining the community’s budgets and financial statements offers a clear breakdown of how fees are allocated and each association’s financial health. Consulting with a real estate agent experienced in communities with layered fee structures is advisable. Engaging a real estate attorney can help ensure all fees are identified, understood, and properly accounted for before finalizing a property purchase.