What are HOA Fees?

What are HOA Fees?

For many first time home buyers, their first investment is into a condominium.  This condominium is part of a community and these community’s have shared ownership and responsibilities.  How does all of this impact you?  Let’s explore what HOA fees are and how they impact you.

HOA Fees

An HOA (Home Owner Association) is a governing body of a condominium complex.  It is comprised of members of the community, usually in the position of a board along with an accounting position (book-keeper) and a president.  The board holds meetings with the membership (residents) and they discuss various topics which impact the entire condominium community.

How an HOA works

As mentioned before, when you purchase a condo for sale in Long Beach, you become part of a community of other condominium owners.  This community is responsible for maintaining commons areas that the complex might have.  For instance, a swimming pool or a lawn.  It may have a club house or  a gymnasium.  Some communities might even have security.  All of these amenities must be maintained by someone and it is usually not the membership.  Rather these jobs are contracted out to companies who do the work.  Keep in mind that the more amenities a complex has the higher the HOA fees will be.

The other side is understanding a bit more about how a condominium community works.  When everything is shared, there are certain areas of the living spaces that are to be maintained by the association and other parts that are maintained by the individual members.  For instance, the rule of thumb is that the individual members are responsible for everything within their particular home.  The association is responsible for maintaining everything outside of the wall.

Here’s an example.  If the toilet in your home stops flushing, you would have to call a plumber to come out and fix the toilet.  You would be responsible for that.  If a pipe in the wall starts leaking, the association would not only pay for the repair of the pipe but also any repairs to your unit.

The second part to this is repairs needed to the entire complex.  For instance, if the roof is in need of repairs and needs to be replaced then the entire roof would be replaced throughout the complex.  If the complex consists of a single building or a series of buildings, the entire roof is replaced at the same time.  Everyone benefits from the roof even if you’re on the bottom floor of the building.  This is for upkeep.

What isn’t covered under the HOA fees is handled through special assessments which we’ll cover in another article.

What are HOA Fees

The money the association uses to maintain the amenities as well as make necessary repairs comes from a monthly fee paid for by the membership.  This fee is required and is paid along with the mortgage payment.  Your bank will take this fee and deposit it into the association’s account.

With the fee being paid, how is the money then dispersed?

Every association is different.  Based on the rules and bylaws, the money is typically put into two separate buckets.  First: daily, weekly or monthly maintenance.  We talked previous about maintaining the grass, taking care of the pools, etc.  The second is for the bigger maintenance items like repairs roofs or fixing garages.

The breakdown is usually 1/3 of the fees goes into the long term care and 2/3 of the fee goes into the regular maintenance.  I say usually because it depends on the rules setup by the association.

Can HOA fees change?

Yes, and they usually do.  Again it depends on the rules and bylaws of the association but the HOA fees can increase by no more than  a certain percentage each year.

Can I see the bank records for HOA fees?

Yes you can.  It is, after all, your money.  State law makes it mandatory that the board provide you with the financial statements of the HOA.

What happens if I don’t pay the HOA fees?

If you have a mortgage, the lender will require you to pay the HOA fees at the same time as your mortgage payment.  But let’s say you stop paying the monthly fee.  What happens then?  First, the association will place a lien on your property.  This means that if you try and sell your condominium, the association will be paid their back dues before you see one penny.  If you continue to not pay your associations dues, they can foreclose on your property.


Obviously there’s a lot of complexity regarding HOA fees and how they work.  Just be aware that because it is a community of people, rather than an individual, there are many local and state laws that help govern how the funds are used and what the community rights are as well as the individual rights.  Knowing what your rights are will make you a more informed buyer.

By | 2016-06-09T05:39:47+00:00 June 9th, 2016|Home Buyer|0 Comments

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