It’s no secret that homeowners associations cost money to live in. Not only are property values higher but there are regular fees residents have to pay. Where does the money go? What is included in HOA fees? Let’s find out.
What is Included in HOA Fees?
Homeowners often complain about the regular fees they have to pay the HOA. But what do HOA fees include? Are they that important?
Those who live in an HOA might know they provide many perks and services. The HOA needs to maintain the common areas and provide services like utilities to add value to community life. However, all of the HOA’s operations depend on community funds, and the primary way it earns them is through HOA fees.
What is included in HOA fees? Here are the most common examples of what HOA fees cover.
1. Maintenance and Repairs
Homeowners associations provide amenities to attract potential buyers. These amenities keep homeowners happy and allow property values to remain high. However, they cost money to maintain. Even if an HOA doesn’t have many amenities, it will still have common areas like shared roads, sidewalks, and entryways. These also take a lot of upkeep.
What do HOA maintenance activities entail? Here are some common expenses included in many communities:
- Cleaning
- Trash disposal
- Snow removal
- Landscaping
- Pest control
- Painting or repainting of exterior and interior common areas like walls and floors
- Preventive maintenance of electrical, lighting, HVAC, plumbing, security, and elevator systems
- Repairs to HOA systems and structures like plumbing, roads, walls, and roofs
- Amenity maintenance (e.g., maintaining the community pool or gym equipment)
2. Utilities
Some homeowners associations provide utilities like water and sewage. But, even if an HOA does not provide utilities, it needs to pay for the utilities of its facilities. It needs to cover everything from water, electricity, and heating. After all, the community pool and the clubhouse restroom won’t be usable without water or sewage services.
Meanwhile, gym equipment and street lights need electricity to function properly. All the common rooms also need proper ventilation, heating, and air conditioning to be comfortable.
3. HOA Insurance
Homeowners associations need insurance to protect them from liability and property damage. In some communities, the governing documents require additional coverage based on the property type and location. For example, some may need to carry Directors & Officers (D&O) insurance, while others need Workers’ Compensation coverage.
In addition, many master policies do not include fire protection by default. The HOA may need additional coverage to protect them from fire and other emergencies such as earthquakes or terrorism.
4. Reserve Funds
HOAs set aside funds for the reserve account to cover the cost of planned major renovations, repairs, and replacements. After all, everything has a useful life — including the HOA clubhouse’s roofs and walls. The HOA will eventually need to pay a lot of money to repair, replace, or renovate these structures and their components to keep them usable.
In addition, the reserve funds may also be used for the cost of emergency repairs and maintenance after a natural disaster or accident. Keeping enough money in the reserves will prevent the HOA from levying hefty special assessments or obtaining loans.
5. Staff Salaries
HOAs may hire workers such as cleaning, maintenance, and accounting staff. Some communities even hire security guards to provide extra protection. However, the HOA will need money to pay their salaries.
6. Professional HOA Management
Running an HOA is hard work. Sometimes, it can be impossible to juggle all the tasks without extra help. For this reason, many HOAs hire professional management companies to handle operations and keep them financially stable.
What do HOA Fees Cover in a Condo?
Condominium associations are unique in that they have a different overall structure compared to single-family and townhome communities. Their shared walls and roofs make their fee structure a little more complex than regular HOAs.
Nevertheless, condo association fees cover similar perks and services. Here’s what the HOA fee includes in a condominium:
- Landscaping
- HOA condo insurance
- Salaries of personnel (e.g. security, cleaning, and maintenance staff)
- Maintenance of common areas like elevators, staircases, lobbies, patios, and hallways
- Running and maintaining amenities such as co-working spaces, pools, and multi-purpose rooms
What About Special Assessments?
Apart from regular HOA fees, homeowners also need to pay special assessments. These are one-time fees that associations charge to cover the cost of maintenance, repairs, and other operations. HOAs often charge these because of the following:
- Lack of operating funds due to delinquencies in the HOA
- Emergency repairs, maintenance, and replacements after a natural disaster or accident
- Lack of funds in the reserve account
- Legal fees arising from unexpected lawsuits and disputes
- Design or construction defects
- Budget shortfalls
Are There Limits to HOA Fees?
What are the HOA fees in Florida? While there is no set standard, the average HOA fee typically falls between $100 and $350. However, higher-end communities with many amenities can charge between $400 and $800 in HOA fees.
This means that HOAs can generally charge the amount they need to cover operating costs. However, according to Florida law, HOA assessments charged according to the annual budget must be levied in each member’s proportional share of the expenses.
Why are the HOA Fees so High in Florida?
Homeowners associations in Florida and many other states may face a rise in HOA fees for several reasons. One of the biggest reasons is higher property values. Typically, HOA fees rise when property values increase because it costs more to maintain the amenities and common areas.
In addition, increasing insurance premiums and regulations that heighten inspection and reserve requirements may also contribute. There’s also inflation to consider, as the cost of labor and materials has also increased over the years.
A Necessary Expense
What is included in HOA fees? Once homeowners know the answer to this question, they may be more willing to pay the assessments. After all, while fees can be annoying to pay, they’re necessary for the HOA’s operations. Without them, the HOA’s common areas and services might suffer and be detrimental to homeowners as well.
Freedom Community Management provides industry-leading HOA management services to communities in Florida. Contact us online or call us now at 904-490-8191 to learn more!
