Article Courtesy of Bankrate
By Sarah Li Cain
Published September 17, 2020
What are HOA fees?
HOA fees are a mandatory monthly, quarterly or annual fee paid by the homeowners
living within a homeowners association to help maintain amenities and common
areas within the community. The offerings that stem from these fees will depend
on the community’s needs, so costs will differ, as well.
The extra cost may be beneficial if it means saving money on paying for
amenities like a gym membership or a swimming pool, or for homeowners who prefer
to outsource some aspects of home maintenance like lawn care.
The funds collected from HOA dues may be used for:
Insurance: Homeowners still have to pay for their own
homeowners insurance policy, but they may also have to pay HOA dues that pay
to insure common spaces within the purview of the association.
Community amenities and services: Some HOAs may offer a
gym or pool for their residents, or security services such as a doorman,
security guard or automated gates.
Pest control: Condo or townhouse communities may offer
pest prevention or control services.
Lawn care: In most cases, the HOA dues you pay will take
care of the lawn on shared areas, though for your own lawn care the
association may have standards you need to adhere to.
City services: Utilities and services such as water,
sewage and trash removal may be included in HOA fees.
Reserve funds: A portion of your HOA fees will be set
aside in a dedicated savings account so that the association can use it for
unexpected expenses. For example, if a window breaks in the clubhouse or a
piece of gym equipment has reached the end of its life, the HOA may use this
reserve to replace them.
Maintenance and repairs: Depending on the weather in your
area, these services can include snow removal, as well as maintaining and
repairing shared structures and common areas. For instance, in communities
that have a clubhouse, some of your HOA dues will be used for that area.
Every homeowners association is different, which is why it’s
crucial you review the Covenants, Conditions and Restrictions (CC&Rs, or the
HOA’s rules and regulations) to see what you can expect to pay and what’s
What happens when you don’t pay
When you miss a payment, your HOA will typically notify you that you’re late on
your dues and outline the consequences, such as being charged a late fee or
interest until it’s paid. The association could also outline any legal
consequences if you continue to miss or remain delinquent on your payments.
Here are some scenarios that might happen to you if you fail to pay your HOA
Your privileges could be taken away
Your HOA could, as an additional or next step, restrict or eliminate your access
to common areas or amenities such as the gym or pool. The idea is to encourage
you to pay your HOA dues to reestablish your privileges.
Your bills could go to collections
If your payments continue to be delinquent, your HOA could hire a collection
agency to obtain the missed fees. This could result in more notices like phone
calls and letters in order to get you to pay.
You could be sued
If legally allowed, your HOA can sue you for the unpaid dues, fines and any
interest that’s accumulated. If this happens, your HOA may have the right to
garnish your wages to take what’s owed from your bank accounts.
Your home could be foreclosed
Depending on the state you live in, there’ll be restrictions on how and when an
HOA can initiate a foreclosure on a home within the community. For states that
don’t have any restrictions, your HOA can foreclose on a home over a small
amount like a few hundred dollars.
If this happens, the foreclosure will be either nonjudicial, or sold without
court involvement, or judicial, which means it goes through the state court
In addition, the HOA may not need to record a lien to proceed with the
foreclosure. In some states, a written record of the declaration of the CC&Rs
serves as the HOA lien and comes into effect the date your payment becomes due.
Exact rules and regulations will differ depending on your HOA’s CC&Rs and state
laws. Again, it’s important to know and understand the rules governing late or
delinquent payments so you’re not going to be surprised over losing access to
privileges or something much more serious.
What if I’m having trouble paying HOA fees?
Distressed homeowners — especially those affected by the COVID-19 economic
fallout — should contact their HOA as soon as possible and inform them about
their financial situation.
Given that many have faced hardship such as a loss or drastic drop in income
recently, you may be able to work out a more affordable payment plan or some
other arrangement so you don’t fall behind on the HOA fees.