Skip to main content

HOA Fees: A Breakdown of All Charges

Magnifying glass situated on top of a calculator and documents

Homeowners’ associations (HOAs) are increasingly becoming more attractive for homebuyers. Convenient amenities, well-maintained neighborhoods, and strong property values are key benefits HOA residents enjoy. However, associations rely on monthly HOA fees and other charges to fund this style of community living.

The amount homeowners pay and the charges they’re subject to depend on many factors, such as the community’s type, size, services, and location. Read on for a breakdown of HOA fees, how they’re used, and why they exist.

Initiation Fees

An initiation fee is a one-time capital contribution paid to the association when a property transfers from one owner to another. This non-refundable fee, also known as a transfer fee, working capital contribution, new owner fee, or buy-in fee, is typically paid by the homebuyer at the time of closing.

HOA governing documents provide details on initiation fees and the amount the association can charge, which generally ranges from two times the association’s monthly dues to a full year’s assessment total.

In new communities, initiation fees fund association operations, including maintenance, repairs, and insurance costs. More established HOAs may use resale capital contributions to fund reserve accounts for future improvement projects.

Read “8 Essential Things You Need to Know About Reserve Funds & Studies” to learn more about reserve accounts.

Regular HOA Fees or HOA Dues

Assessments or dues are HOA fees paid to the HOA on a regular basis—usually monthly, quarterly, or annually—and contribute to day-to-day operations, amenity upkeep, and reserve funds. These fees pay for things like swimming pool maintenance, playground equipment, and landscaping services.

All HOA residents are required to pay regular HOA assessments, which are also referred to as:

  • Maintenance charges
  • Condo fees
  • Co-op dues
  • Strata fees
  • Common charges

When managed properly, HOA dues help maintain the community’s value and desirability while enhancing the overall living experience.

HOA Special Assessments

While an HOA’s reserve funds are meant for anticipated community projects and large-scale repairs, unexpected expenses may arise, or the budget may be insufficient to cover capital improvements. When this happens, an HOA can levy a one-time special assessment to cover the additional costs.

Depending on state laws and governing documents, an association may charge homeowners a special assessment for unusual or emergency expenses, like an increase in insurance or a surprise repair bill for a pool. Special assessment amounts vary based on the unforeseen expense.

HOA Fines

Another charge a homeowner might see is an HOA fine. Rather than a means of funding, fines are used to enforce HOA guidelines. If a resident violates their association’s rules or is delinquent on payments, the HOA board can issue a monetary fine for the offense.

HOA fines help protect the association’s integrity and stability by imposing consequences for noncompliance. Different types of fines include:

  • HOA violation fines. HOA fines are penalties for homeowners who violate HOA rules and regulations.
  • Late charges. Associations may issue late fees for unpaid HOA assessments or fines.
  • Interest. Some HOAs charge interest on past-due amounts in accordance with state laws and the association’s governing documents.
  • Attorney fees. If a homeowner’s account goes to collections or the association must take legal action for delinquent payments, some HOAs have the authority to charge the homeowner for attorney fees.

Most communities have a set process for handling HOA violations or late payments, which involves several steps before issuing fines.

Did you violate a rule and receive a fine? Read “Top Frequently Asked Questions About HOA Violations” to learn what happens next.

Processing Fees

Paying assessments and other fees online through the HOA website or community management portal may incur processing fees of a few dollars or a percentage of the payment amount.

Also, there may be fees for requesting official documents from the HOA board. For example, homebuyers may order a resale certificate from the association before closing. Because many states limit how much an HOA can charge for these certificates, the processing fee will vary by association and location.

Man and woman reviewing finances together on a laptop

HOA Fees: 5 FAQs

Get insightful answers to frequently asked questions about HOA fees and charges.

1. What’s included in most HOA fees?

Most HOA fees fund the association’s operations and often cover:

  • Amenity maintenance and repairs
  • Community landscaping
  • Security and other services
  • HOA insurance
  • Utilities in shared spaces
  • Reserve account funding

2. What happens if I don’t pay my HOA fees?

When you purchase a house in a community association, you become a member of that HOA and agree to its terms, including paying HOA assessments. While every community has different rules and bylaws, there are always consequences for failing to pay HOA fees.

If your HOA dues are delinquent, the association may have the authority to:

  • Call a noncompliance hearing
  • Take your amenity rights
  • Issue late fees and interest
  • Bring a lawsuit against you
  • Put a lien on your property
  • Foreclose on your home

3. Are HOA fees included in mortgage payments?

In most cases, HOA fees aren’t included in your monthly mortgage payment. HOA assessments and other charges are separate and paid directly to the association.

4. Are HOA fees tax deductible?

As a general rule, HOA fees aren’t tax-deductible if the home is your primary residence. However, there may be some exceptions if you use the home as a rental property or workplace. Consult a tax professional for guidance claiming HOA fees.

5. Do renters pay HOA fees?

Most landlords will pay HOA fees on their own to avoid late fees or other penalties. However, they may pass the cost of these fees to tenants through the rent price.

Everything HOA Residents Need to Know About Assessments

HOA fees are an essential part of community living. Although more than 74 million residents live in community associations in the United States, many still question their financial contributions to their HOA. Check out our ebook, “Everything HOA Residents Need To Know About Assessments,” to learn more about the importance of HOA fees.