What is and HOA anyway?

When buying a condo or townhome, you’ll be responsible for Homeowners Association (HOA) dues. These fees help maintain the community, but it’s important to understand if they’re fair, how they’re used, and why they benefit homeowners.

1. What Are HOA Dues & How Are They Set?

HOA dues are monthly or quarterly fees that cover shared costs for maintaining the community. The fees are set and voted on by the HOA board, which is made up of homeowners in the community.

?? Who Decides the HOA Dues?

• Homeowners on the HOA Board—They review expenses and vote on budgets.
• Property Management Company (if applicable)—They help manage finances but don’t set the fees.
• Reserve Fund Needs—Fees may be adjusted based on future repairs.

?? Key Takeaway: HOA dues are not controlled by an outside company—they are managed by homeowners for homeowners.

2. What Do HOA Fees Typically Cover?

HOA dues are not just an extra bill—they cover important services that protect property values and maintain the community.

? Most HOA Fees Cover:

• Insurance (covers common areas, exterior, or even partial unit insurance)
• Water, Trash, and Sewer (these utilities are often included)
• Grounds Maintenance (landscaping, common area upkeep)
• Exterior Maintenance (roof, siding, sidewalks, parking lot repairs)
• Security Services (gates, security guards, cameras)
• Reserve Fund Contributions (for major future repairs)
• Common Amenities (pools, spas, gyms, clubhouses, tennis courts)
• Some HOAs Even Include: Cable TV, Internet, and Valet Parking

?? Fair HOA dues provide value—you should be receiving services and maintenance in return for your payments.

3. How to Judge If HOA Dues Are Fair for Condos & Townhomes

Not all HOA fees are reasonable. To decide if the HOA dues are fair, compare these factors:

? Compare to Similar Communities

• The best way to judge HOA dues is to compare them to similar condo or townhome complexes in the area.
• Some HOAs have lower dues because they: Are newer communities with less maintenance needed. Have healthy reserves, reducing the need for higher monthly contributions. Offer fewer amenities (no pool, spa, gym, clubhouse, or large landscaped areas).
• A townhome community where homeowners maintain their own yards and roofs may have lower fees than a condo complex where everything is covered by the HOA.
• If an HOA has high dues but few amenities, that may be a red flag.

? Look at What’s Included

• A higher HOA fee that includes insurance, water, trash, sewer, and internet may be a better deal than a lower HOA fee where you must pay those expenses separately.
• Ask for a detailed breakdown of what your fees cover.

? Check the Reserve Fund

• A healthy reserve fund means the HOA is financially stable and prepared for future repairs without relying on special assessments.
• If the HOA has low reserves, you may face surprise one-time fees (special assessments) for repairs.

? Review Past Increases

• Look at the last 3-5 years of HOA fee history.
• Gradual increases (2-5% per year) are normal, but sudden jumps or frequent hikes may signal mismanagement.

? Check for Hidden Costs

• Some HOAs charge unexpected special assessments for repairs not covered by reserves.
• Ask if any assessments are planned for the near future.

?? Red Flags: High fees with poor maintenance, low reserves, or frequent special assessments.

4. Lender HOA Review: Why It’s Important

Before approving a mortgage loan for a condo or townhome, lenders perform a HOA review to determine if the association is financially stable and liquid.

?? What Lenders Check in an HOA Review:

• Reserve Fund Health – Lenders want to see that the HOA has enough savings for future repairs.
• Delinquency Rates – If too many homeowners aren’t paying their HOA dues, the lender may reject financing.
• Pending Lawsuits – If the HOA is involved in lawsuits, it could be a financial risk.
• Insurance Coverage – Lenders check if the HOA’s master insurance policy is sufficient.
• Special Assessments – If a large number of units are being hit with assessments, it could indicate financial trouble.

?? Why This Matters for You:

• If the HOA fails the lender’s review, your loan may be denied.
• A financially healthy HOA means you’re less likely to face special assessments or sudden fee increases.
• If a lender approves the HOA, it’s a good sign that the community is financially stable.

? Pro Tip: Before making an offer, ask if the condo or townhome complex is FHA or VA-approved—this means it has already passed strict lender guidelines.

5. How HOA Dues Benefit Condo & Townhome Owners

Some buyers worry that HOA dues are an unnecessary expense, but a well-managed HOA actually benefits you in the long run.

?? How HOA Fees Protect Homeowners & Property Values: ? Keeps the community well-maintained, preventing property values from dropping. ? Provides shared amenities (gym, pool, clubhouse) that individual homes wouldn’t have. ? Handles expensive repairs (roofs, siding, streets) so individual homeowners don’t have to pay large out-of-pocket costs. ? Creates a stable and attractive neighborhood, which helps when selling in the future.

?? Bottom Line: A properly managed HOA protects your investment by keeping the community in good condition.

6. Can HOA Fees Go Down?

Yes! Since homeowners on the board control the budget, HOA fees can be lowered if:

• Expenses are reduced or a new vendor offers a better deal.
• The reserve fund is strong, reducing the need for high contributions.
• The community votes to cut unnecessary amenities.

However, fees can also increase if:

• Maintenance costs rise.
• Major repairs are needed.
• The community expands amenities.

?? Homeowners have a say in HOA decisions—attend meetings and vote for board members who manage funds responsibly.

Final Takeaways

? HOA fees are set by homeowners on the HOA board, not an outside company. ? A well-managed HOA protects your investment by maintaining property values. ? Compare fees to similar properties and check what’s included to judge fairness. ? HOA fees can increase or decrease depending on expenses and homeowner votes. ? Some HOAs have lower dues because they’re newer, have healthy reserves, or offer fewer amenities. ? Special assessments are temporary, and you can negotiate for the seller to pay them. ? Lenders review HOA financials before approving loans, and a passed HOA review is a good sign of financial stability.

?? Before buying a condo or townhome, always review the HOA financials, reserve funds, and meeting minutesto ensure you’re making a smart investment!

Understanding HOA dues is essential when buying a condo or townhome, as they directly impact your monthly expenses and the long-term value of your investment. A well-managed HOA ensures financial stability, maintains the property, and prevents unexpected costs, and it's important to review its details.