Homeowners associations charge regular HOA fees. These fees serve a critical purpose in the operations and maintenance of the community. Without these fees, HOAs would have no way of paying for essential services, upkeep, and other costs.
What are HOA Fees?
Also known as HOA dues or condo fees, HOA fees are regular assessments that homeowners pay to their association. Homeowners have a financial obligation to pay these dues, which they agree to fulfill upon purchase of the property or unit in the community.
Associations collect these fees regularly (monthly, quarterly, or annually). The HOA board is responsible for calculating these fees based on anticipated expenses and contributions for the period.
In Maryland, Section 11B-117 (for HOAs) and Section 11-109 (for condos) outline the authority of associations to levy and collect dues from owners. Similarly, an association’s governing documents may state further powers and requirements.
What Do HOA Fees Cover?
Homeowners association dues and condo fees cover the expenses related to the maintenance, management, and operation of the association. These include, but are not limited to:
- Maintenance of Common Areas
- Landscaping, mowing, and snow removal
- Cleaning and upkeep of clubhouses, lobbies, or hallways
- Sidewalk and road maintenance inside the community
- Utilities for Shared Spaces
- Electricity for streetlights or common buildings
- Water for irrigation systems
- Heating, cooling, or lighting in shared facilities
- Amenities
- Pools, gyms, tennis courts, or playgrounds
- Security gates or patrol services
- Community events and activities
- Repairs and Replacements
- Roof or siding repairs on condo buildings
- Pavement resurfacing
- Playground or gym equipment replacement
- Insurance
- Master insurance policy covering common areas or condo buildings
- Liability insurance for accidents on shared property
- Professional Services
- HOA management company fees
- Legal and accounting services
- Reserve studies and audits
- Administrative Costs
- Office supplies, postage, and communication tools
- Technology or HOA websites/portals
- Reserve Fund Contributions
What HOA Fees Don’t Cover
Homeowners should be aware that their HOA dues don’t cover all expenses. The same goes for unit owners and condo fees. These dues cover common expenses shared by the community, for which the association is responsible.
In contrast, condo and HOA fees don’t cover:
- Personal property and belongings (including the interior of the home, yards, and patios)
- Individual homeowners insurance
- Personal vehicles and parking
Sometimes, an association board will assess separate charges for a major project or expenditure. Most associations include these expenses when determining regular fees, but others impose a special assessment instead.
Who Pays Homeowners Association Fees?
All homeowners have a financial obligation to pay HOA dues or fees. The same goes for unit owners in a condo association.
When buyers first purchase a home in an HOA community, they receive disclosure documents outlining their responsibilities as members of the association. One of these responsibilities is to pay dues and assessments. Financial reports, past budgets, and reserve summaries give buyers an overview of what to expect.
It is worth noting that board members are not exempt from paying regular dues. Board members don’t receive special treatment, discounts, or compensation for their service. They are volunteers, and financial exemptions may interfere with the association’s fidelity coverage.
How Much are Average HOA Fees in Maryland?
Several factors can influence fee amounts, such as location, size, and type of community. Those located in more affluent areas tend to have higher fees compared to their counterparts. Additionally, the more amenities and services an association has, the higher the fees.
That said, in Maryland, typical HOA fees fall somewhere between $300 and $400. Condo associations tend to charge higher fees due to the way their communities are set up. Condominiums usually require more comprehensive upkeep, with more shared elements and spaces.
Can HOA Fees Increase?
Yes, HOA fees generally increase as costs rise. Inflation, rising wages, and rising costs of goods and services are all factors that can affect fees as well.
That said, in Maryland, certain laws limit fee increases. An HOA board usually can’t raise the budget too much without owner approval.
According to Section 11B-112.2, if the board wants to spend money that would increase the dues paid by homeowners by more than 15% above the current year’s approved budget, they must hold a special meeting. At that meeting, homeowners must get at least 10 days’ written or electronic notice. Furthermore, the increase must be approved by amending the budget.
The only exception is if the spending is urgent and necessary to prevent harm. If a problem poses a health or safety risk to homeowners or could cause serious damage to the community, the board can spend the money without calling a special meeting.
Similar provisions exist under the Maryland Condominium Act under Section 11-109.2.
What Happens When You Don’t Pay HOA Fees?
When homeowners fail to pay their fees, they become delinquent. Delinquent homeowners can face several potential consequences.
Late Fees and Interest
An association board’s first line of action is typically to charge late fees or interest. This compounds the amount the homeowner owes to the association. The late fee can even keep increasing as more time passes and the dues go unpaid.
Suspension of Privileges
Some associations temporarily suspend the owner’s privileges until they settle their outstanding debt. This includes blocking access to amenities and even losing voting rights.
Legal Action
An association can also take legal action against a delinquent member. This can result in a court ordering wage garnishment to satisfy the owner’s debt against the HOA.
Collection Agency
Some communities refer delinquent accounts to a separate collection agency. This agency then collects a fee based on the amount collected. Many collection agencies also report delinquencies to a credit bureau, leading to a lower credit score for the owner.
Liens
Associations can attach a lien to the delinquent owner’s property. Liens make it harder for owners to sell their homes or refinance their mortgages. Associations must follow certain requirements and procedures when filing a lien.
Foreclosure
After filing a lien, an HOA can initiate foreclosure proceedings. This means homeowners stand to lose ownership of their property if they fail to settle their unpaid fees. As with liens, there are specific legal requirements and procedures that HOAs must follow when it comes to foreclosure.
HOA Fees Meaning: Explained!
Homeowners have a responsibility to pay dues, while board members have a responsibility to collect them. These fees serve an important purpose in the grand scheme of things. Without these fees, an HOA community would lack the funding for essential maintenance and services.
Majerle Management, Inc. provides enforcement assistance to HOAs and condo associations in Maryland. Call us today at (301) 220-1850 or contact us online to get started!
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