How an HOA Works

When you purchase a property within a community association or HOA, you are joining a “common interest development”. This means that you have to pay a fair portion of the cost of the maintenance and operation of common areas in your community, shared amenities, equipment, et cetera; keeping the community spick and span has a lot to do with maintaining and enhancing the value of properties. All these services are paid for by the assessment fees payable by all owners. Dependent on the particular community, you may be required to pay annually, semi-annually, quarterly, or monthly.

The Board of Directors sets annual assessments (a.k.a. “maintenance fees” or “dues”), which calculate what each owner should pay on the basis of the predicted annual outgoings. Every year the Board of Directors will set a budget for the Association on the basis of spends over the previous years, how much they need to put into reserve/savings accounts, and any projects planned for the forthcoming year. Board members make no profits from HOA fees; they own homes in the community just as you do, and they have to pay the same dues as you.

You may be aware that you have to pay your dues, but you might not know exactly where the money goes. Each Association has specific policies and regulations, and you can discover all of these by reading your community CC&Rs and bylaws.

If you go to the Community Info section of your online account you will find your community’s budget, or you can ask your Community Manager to send you a copy by emailing them using the contact form on this site.

What are HOA dues used for?

Although HOA assessments can be regarded by some as unnecessarily expensive, or even just unnecessary, in fact they play crucial part in protecting your lifestyle and making sure that you live in a financially viable, clean, safe and visually appealing community, which goes a long way to protecting the value of your property.

Reserves

Reserve Funds

Whenever possible, HOAs try to put a share of the assessments into special reserve funds covering special projects, i.e., repairs or renovations that don’t require regular attention, e.g., resurfacing the roads in your community, replacing gates, replacing swimming pool systems, and so forth. Should the reserve fund not contain sufficient monies for these expenses, the HOA will introduce a special assessment, which you are obliged to pay.

Utilities

Utility Payments

HOAs have to pay bills for heating, water, light, electricity, air conditioning, etc. used in any shared areas of your community.

Maintenance

Ongoing Maintenance

This includes maintaining and repairing any shared areas, amenities, systems, and equipment. This can encompass landscaping and lawn care, water facilities, sewage systems, plumbing, air-conditioning/heating systems in communal buildings, street lighting, removing trash, maintaining shared amenities like tennis courts, basketball courts, playgrounds, pools, clubhouses, workout equipment, etc., pest control, painting, cleaning, elevator systems, security systems, and maintaining shared exteriors.

Insurance

Insurance Policies

An association has to take out a master insurance policy to protect all shared property, exteriors, and buildings from damage; additional insurance may be required, for example 3rd party insurance, depending on the types of properties in your community, local regulations, etc. Don’t forget that this insurance doesn’t cover your own property, you still need a policy for your home.

Contractors

Personnel

If a community has contracted employees, e.g. social events coordinators, janitorial staff, maintenance staff, etc., some of the assessment will be used for paying salaries/benefits to them.

Management

Property Management

To guarantee that community finances and management remain stable and operating, an HOA may frequently decide to employ a professional community association management company whose fees will be paid for from the HOA assessment. Such companies are responsible for effective implementation of the Board’s policies, providing a complete management solution that can offer excellent value and improve the general environs and lifestyle of the community.