HOA 101: What Are Fees, Fines, & Assessments?

Homeowners’ associations (HOAs) generate their operating funds by collecting fees, fines, and assessments from association members. This money allows the HOA to carry out its responsibilities, including maintaining shared spaces, saving for future repairs and improvements, and enforcing community guidelines. While your HOA fees can vary by community type and location, the typical HOA fee for a single-family home can range between $100 and $300. Keep reading to learn more about the financial commitment of belonging to an HOA and to understand common community fees, fines, and assessments.

What is an HOA fee?

HOA fees are the monthly or yearly dues which homeowners are responsible for paying. Renters may also be responsible for paying HOA fees, but usually, they’re included in their monthly rent. These fees are paid to the association and contribute to daily operational expenses and reserve funds for future repairs and improvements.

How are fees assessed?

A board of directors runs the HOA. These boards consist of volunteer homeowners, and they’re responsible for setting the annual fee amount. When determining the exact payment required, a board will consider all operating, maintenance, and savings expenses, including things like utilities, vendors, insurance, and more. Fee amounts for your HOA will also be determined based on their needed reserve fund amounts. Unlike daily expenses, these funds help pay for future improvements and repairs for things like pools, parks, and clubhouses.

What do the fees cover?

Typically, your fees will be directly tied to the size, cost, and complexity of your association's shared amenities. What your HOA fees cover depends on your association. For some master planned communities, fees may help pay for swimming pools, fitness equipment, and other amenities like tennis courts and parks. Condo associations may use their fees to maintain lobbies and pay for a trash valet.

Are the fees worth it?

Before you buy a home that’s part of an HOA, make sure you’re familiar with any fees you may be responsible for paying. You’ll need to decide for yourself if these fees are worth it. Consider the amenities they offer and the benefits they provide to the homeowners. Keep in mind, HOAs also offer a lot of things that are difficult to quantify. An HOA can help protect your home's value by maintaining the look and feel of a neighborhood, and for some people, it provides a real sense of pride and community.

What’s an HOA fine?

Fines aren’t the primary source of income for an HOA. Instead, HOA fines are used to help enforce community guidelines, as outlined by their governing documents. Fines are issued when a violation of community rules and standards occurs. These rules can vary but may include things like ignoring lawn care, parking in undesignated areas, or violating noise restrictions.

Can my HOA give me a fine?

Yes, owners can be warned or fined for not following agreed-upon rules and regulations. Most violations will be resolved with a friendly verbal or written reminder, and your board will work with you to resolve most issues. When problems persist, HOAs can issue a monetary fine.

What is a reasonable fine?

Your HOA board determines fine amounts and whether they’re reasonable. Most HOA fines start at around $25 and increase to $50 and $100 if you don't pay or continue to violate the rule. The type of violation also influences the fine amount. To encourage people to pick up after their dogs, for example, an association may set higher fines of $100 or more for this particular violation. If you believe a set fine amount is not reasonable, you can help change it. Work with your board to make sure any fine your HOA issues is reasonable and fair.

How do HOAs enforce fines?

HOA fine enforcement usually starts and ends with a warning. Your HOA will likely have an escalation protocol when it comes to fines. It usually begins with educating new homeowners. People who are more familiar with the community rules may receive a formal letter or phone call to correct any violations. At this stage in the process, a fine may be given, and the offense should be quickly fixed, and the fines paid. When fines aren’t paid, additional fees may be added depending on your community’s governing documents and local, state, and federal laws.

What’s an HOA special assessment?

Occasionally, a special assessment is needed to pay for an unexpected cost. This could be an increase in insurance or a surprise repair bill for a pool or clubhouse. In these cases, the board has the option to pass a special assessment to cover the additional costs.

How are assessments calculated?

Special assessments are almost always tied to direct cost. How your HOA divides that cost is up to the board and the governing documents. It’s common for an HOA to share the total costs equally amongst all homeowners. For example, if there was an unexpected elevator repair of $100,000, then the board may ask each of their 100 residents to pay $1,000 to cover the total repair bill.

Can you claim an assessment on your taxes?

Yes, you should be able to claim special assessment payments on your taxes if they were used for maintenance and repairs. However, always check with your tax professional before claiming special assessment payments on your taxes.

Can my HOA take my home if I don't pay?

Most HOAs look at special assessments as a last resort and are keenly aware of the financial burden they may place on homeowners. When your HOA requests an assessment payment, you are legally required to pay it. In some extreme circumstances, it’s conceivable that an HOA will place a lien on your property to collect a back payment. However, your HOA should work with you to make sure all debts are paid in a way that is mutually beneficial to the homeowner and the association.

Got more HOA questions?

If you have more questions about your HOA, then check out our other "HOA 101," posts, including “What is an HOA?” and “Basic Terms & Definitions.”