Why Are There Two HOA Fees & What Do They Cover?

A Homeowners Association (HOA) is a private organization that establishes and enforces rules for properties within a community, managing common areas and upholding community standards. While many are familiar with a single HOA fee for shared resources, some properties or communities may have more than one HOA fee. This article explores the reasons for multiple HOA fees and what each payment typically covers.

The Purpose of a Single Homeowners Association Fee

A standard homeowners association fee primarily covers the operational costs and maintenance of shared spaces and amenities. These common expenses often include landscaping for community areas, upkeep of facilities like swimming pools or clubhouses, and utilities for shared lighting or irrigation. The fee also contributes to property insurance for common elements within the community, protecting against liabilities and damages to shared structures.

A portion of the single HOA fee is typically allocated to administrative costs, including professional management, legal services, and accounting for the association. A significant component of the fee funds a reserve account, a savings fund for long-term capital repairs and replacements. This reserve ensures that major projects, such as roof replacements on shared buildings or significant pavement repairs, can be addressed without levying unexpected special assessments.

Common Scenarios Leading to Multiple HOA Fees

Multiple HOA fees often stem from the hierarchical structure of larger, master-planned communities. A common arrangement involves a “master association” that governs the entire development, overseeing broad community-wide amenities and infrastructure. This master association might manage main roads, large community parks, or extensive recreational facilities.

Within such expansive communities, smaller “sub-associations” or “neighborhood HOAs” are established to manage more localized elements. These sub-associations might be specific to a particular neighborhood, a condominium building, or a gated section of single-family homes, each with its own distinct common areas and maintenance needs. This layered governance structure necessitates separate fees to fund the different levels of management and maintenance responsibilities.

Another scenario involves communities containing diverse property types, such as single-family homes, townhouses, and condominiums, within a single development. Each property type may have unique common elements or maintenance requirements, leading to specific fees for each type in addition to any overarching community fee. Mixed-use developments that combine residential and commercial properties might also establish separate fee structures to address distinct operational needs.

Understanding What Each Distinct Fee Covers

When multiple HOA fees are present, each payment typically funds different tiers of services and responsibilities. A master association fee generally covers the maintenance and operation of facilities and common areas. This can include expenses for main entryways, extensive road networks within the community, large-scale recreational complexes, and overall community-wide landscaping. The master association often handles the highest level of administrative oversight and strategic planning.

In contrast, a sub-association or neighborhood-specific fee addresses more localized maintenance and amenities. For instance, a sub-association might cover the exterior building maintenance for condominiums, including roof repairs, painting, and common hallway upkeep. These fees could also fund services like gate maintenance for a specific gated neighborhood, localized landscaping within a sub-division, or exclusive amenities such as a small neighborhood pool or clubhouse. The sub-association’s fee typically supports the day-to-day operational needs and specific amenities.

Locating and Interpreting Your Community’s Fee Structure

To fully understand your community’s fee structure, consult the official governing documents of the homeowners association. These documents typically include the Covenants, Conditions & Restrictions (CC&Rs), bylaws, and annual budget reports. The CC&Rs are legally binding and outline the rights, responsibilities, and restrictions for both homeowners and the association, often detailing assessment obligations.

Bylaws establish the operational framework of the HOA, covering aspects like board elections and meeting procedures, and how fees are managed. Reviewing the annual budget reports provides a detailed breakdown of how collected fees are allocated across various services and reserve funds. These documents are usually provided during the property purchase process or can be requested from the HOA management company or board members.