One of the mandates in the “Declaration of Covenants, Conditions and Restrictions” (CC&Rs) of a Homeowner’s Association is payment of dues. Depending on the association, these dues can be monthly, quarterly or annually. They can also vary, ranging from as minimal as $50 to as much hundreds of dollars.
Where Exactly Are You Paying For?
A Homeowner’s Association’s (HOA’s) dues go toward the association’s expenses. Dues are also referred to as assessments for single-family residences or maintenance fees for condominiums. The HOA must have operating funds to perform the duties for which it is legally responsible for, such as repairs, maintenance, administration and keeping enough reserve funds for major common area (i.e., pools and parks) repairs and replacement. The HOA’s governing documents should include information pertaining to dues, their purpose or use, collection procedures upon delinquency and degree of authority for levying fees, fines or other charges.
Who Decides What You Will Pay?
Your HOA dues are determined by the association’s board of directors. The amount of the dues are based on the annual budget for the year and may include assessment increases–without homeowner approval–to fund significant increases in insurance premiums or an unexpected expense shortfall. The HOA’s CR&R may limit the number and percentage of assessment increases in a given year.
Special assessments are one-time dues the Homeowner’s Association collects to cover an unexpected expenditure. Special assessments require approval by majority vote of the homeowners. Examples of special assessments include major renovations of a community clubhouse; addition of a pool or tennis court; replacement of roofing, siding or private roads within a condo; or replacement or addition of access gates.
What Happens if You Don’t Pay?
When you don’t pay your HOA membership dues, it can impact financial stability of the association and affect its ability to provide the services your dues are paying for. Failure to pay your dues also result in fines and legal penalties. A HOA can pursue whatever legal means to collect payment, which can include reporting to the credit bureaus, putting a lien on your property and even foreclosing on your property. While the latter is extreme, the association may deem it necessary to continue to fulfill its responsibilities to the other homeowners. The association may also impose late fees and collection/legal costs on delinquent homeowners.