HOA fees, often called dues, are the regular payments owners make to their homeowners association or condo association. They fund the upkeep of shared property, the association’s insurance, amenities, management and savings for future repairs. They are usually billed monthly or quarterly, and paying them is a condition of owning a home in the community.
What HOA fees usually cover
It depends on what the association is responsible for, which the governing documents set out. Common items:
- Landscaping, snow removal and upkeep of common areas
- Amenities such as a pool, gym or clubhouse
- Insurance for shared property, and in condos often the building itself
- Exterior maintenance, in many condo and some townhouse communities
- Shared utilities, trash collection or water in some buildings
- Management company and accounting fees
- A contribution to the reserve fund for big future repairs
How fees are set
The board adopts an annual budget, estimating every cost plus a reserve contribution. That total is divided among owners, either equally or by a formula in the documents, often based on unit size.
Monthly fee per owner = (Operating budget + Reserve contribution) / Number of shares / 12
A hypothetical 80 unit condo with a $288,000 operating budget and a $96,000 reserve contribution, split equally, charges ($288,000 + $96,000) / 80 / 12, or $400 a month per unit.
Special assessments
When a major cost exceeds what reserves can cover, such as a new roof or storm repairs, the board can levy a special assessment, a one time charge on every owner. Associations with healthy reserves need them less often. Before buying, ask for the budget, the reserve study and any planned or recent assessments.
How HOA fees affect a rental
HOA fees are a fixed cost that comes out of rent before you see any profit. On a condo renting for $2,000 with $400 in dues, a fifth of the rent goes to the association before the mortgage, taxes or repairs. For rental property, dues are generally a deductible operating expense, while a special assessment for a capital project may need to be depreciated; ask a tax professional.
Why it matters for landlords
Dues and assessments can make or break a rental’s numbers, so include them in every analysis and budget for increases. Keep the association’s rules on hand for tenants, and decide in the lease who pays fines a tenant causes. In TenantLoop, record dues as a recurring expense on the property so they show in your profit and loss every month.
Related terms
In practice. How the term shows up day to day.
Can HOA fees go up?
Yes. The board sets the budget, usually every year, and dues can rise with costs such as insurance and repairs. Governing documents and state law may limit how much they can rise without a member vote.
Can a landlord make the tenant pay HOA fees?
The owner stays responsible to the association. A landlord can factor dues into the rent, but billing them to the tenant as a separate fee may be limited by local law and should be clear in the lease.
What happens if HOA fees are not paid?
The association can charge late fees and interest, and in many states place a lien on the property. Some states allow an association to foreclose on unpaid dues, subject to rules and limits.