If you have recently purchased a home that is part of a homeowners association, you may have already starting paying your HOA fees. Each member of the community, along with signing the governing documents that provide the community with order and stability, must pay weekly or quarterly fees. You may be wondering where the HOA fees go that you pay each month.
Who Collects the Fees?
Each HOA is different, but generally speaking the board of the association collects the fees. This can either be done in person via check or online if the community has invested in HOA software. In other cases, the fee may be collected via a management company if the community has enlisted the help of the company to manage finances and other aspects of the association.
What Do the Fees Go Towards?
There are many regulations that restrict the use of the fees that residents pay to the HOA. For example, there is often a yearly cap on how much the board can spend on capital improvements each year, which is usually outlined in the governing documents. Other expenses that your fees may covered are listed below.
Depending on where you live, you may have a pool, community wide internet access, a tennis court, or a community garden. Often your fees will cover the amenities specific to your community.
One of the biggest items that HOA fees go towards is maintenance. This can be lawn care, resident snow removal, pest control, trash removal, roof repair, cleaning, maintenance of electric systems, and cleaning and improving any communal areas such as the clubhouse or exteriors.
Management Company Fees
Some HOAs invest in a management company to help take care all of the many details of running a homeowners association. Though this investment can save time and money in the future, part of your fees may go towards employing the company.
Insurance is an important investment that many HOAs go without. Insurance policies can help protect the community and individual residents by preparing for eventualities. Part of your fee may also be invested in an insurance policy.
Many HOAs set aside a portion of resident fees to help save up for more long-term projects that are not a yearly occurrence. These projects are usually larger maintenance projects such as a repaving, repainting, or a large scale roof repair.
In the event that an unexpected event is not covered by the insurance policy, some HOAs set aside an emergency fund to cover any and all unexpected expenses.
Although members of the board are generally serving on a volunteer basis, some of your fees may be going to pay for employees that have been hired on. These fees may cover the salaries of maintenance workers or other personnel.
The convenience alone is often enough for residents to justify the monthly or quarterly fees that are paid to the HOA. However, If you have any specific questions about where your money is going, it is always helpful to contact the board and have them answered.