It is no secret that HOA fees increase every few years. Homeowners might wonder why, and it is the HOA board’s job to explain it to them. Additionally, board members should always follow proper procedures and adhere to the limits imposed on their authority. This applies to raising dues as well.
Can HOA Fees Increase?
Homeowners in an HOA are obligated to pay regular dues to the association. These dues cover the association’s shared expenses, including maintenance and landscaping, insurance, and management fees. Buyers usually receive a summary of the fees before they buy into the community.
Once a member, a homeowner must pay their fees regularly. Noncompliance can result in late fees, suspension of privileges, legal action, liens, and even foreclosure.
Now and then, homeowners might notice their fees increasing. But can HOA fees go up in the first place? There are two authorities to check for confirmation: state laws and the governing documents.
Some states explicitly prohibit associations from raising dues that go beyond a certain amount. In some communities, the CC&Rs and bylaws impose such limitations. That said, the HOA board generally has the authority to increase dues as it deems necessary to meet the association’s projected expenses.
Can HOA Fees Increase in Virginia?
In a word, yes. Section 55.1-1805 of the Virginia Property Owners’ Association Act and Section 55.1-1904 of the Virginia Condominium Act give associations the authority to levy assessments. Section 55.1-1825 and Section 55.1-1964 allow associations to levy additional assessments for common area maintenance, repairs, and replacements.
Dues can’t stay the same forever. The HOA board generally has the power to raise dues as it sees fit. Vendor services, the cost of goods, insurance premiums, and management fees — all of these expenses can go up over time, resulting in a need to increase HOA fees as well.
Additionally, in Virginia, there is no limit on HOA fee increases under state law. Board members can even levy additional assessments for the purpose of maintenance and repairs. That said, board members must check their CC&Rs and bylaws, as these documents may impose a cap on increases.
In some communities, the CC&Rs require boards to obtain membership approval before raising dues beyond a specific amount or percentage. Meanwhile, in other communities, boards have full authority to raise dues to meet the association’s needs.
Do HOA Fees Increase Every Year?
It depends on the association’s needs and current economic conditions. Generally, homeowners should expect fees to increase every year. This is usually because of inflation and rising costs.
Costs follow a domino effect. When wages and the cost of goods go up, vendors have to raise their prices as well. When natural disasters happen more often, insurance providers take on more risk and increase their premiums, too. All of this can influence the association’s anticipated expenses and, therefore, HOA fees.
How Often Do HOA Fees Increase?
Generally, associations raise their dues by three to five percent every year. Some communities manage to keep fees the same year over year, with an increase coming every few years.
Several factors can affect dues increases, including but not limited to:
- Inflation. General inflation has an effect on everything — from insurance to vendor services.
- Rising Insurance Premiums. Insurance is one of the biggest reasons associations raise dues. Providers continue to increase premiums due to inflation, more frequent perils, and more expensive rebuilding costs.
- Higher Utility Costs. If the association covers utilities, increases in electricity, water, gas, and trash services can cause fees to go up.
- Vendor Price Increases. When contractors and vendors raise their prices, associations are forced to keep up or find a new service provider.
- Rising Labor Costs. When wages rise, association expenses increase, resulting in higher dues.
- Underfunded Reserves. If reserves fall behind, dues often need to increase to catch up.
- Aging Infrastructure. Older buildings and facilities tend to require more repairs and replacements, leading to higher fees.
- Financial Planning. If the board fails to plan for contingencies or underestimates upcoming costs, it can result in a budget deficit, forcing the board to raise dues. When done right, budgeting can keep dues at a reasonable rate.
- Cost Cutting. Delaying maintenance, lowering insurance coverages, and cutting back on non-essential costs can offset increases.
Can HOA Raise Dues Without a Vote?
Whether or not an HOA can raise dues without a vote depends on state laws and the governing documents. In Virginia, board members generally don’t require a vote from homeowners to raise dues. This means the board can approve the increase with a simple board vote.
That said, every community is different. Board members should check their CC&Rs and bylaws for any voting requirements to pass an increase in HOA fees. Some associations require membership approval before raising dues by a certain amount or percentage.
Can an HOA Raise Dues Without Notice?
In most cases, no. An HOA generally can’t raise dues without giving owners notice. If there’s going to be an increase, most CC&Rs or bylaws typically require the board to send owners a proposed or adopted budget before the new amount takes effect. Even if owners don’t need to vote on the increase, notice is necessary.
How Can an HOA Increase Fees Properly?
To increase fees the right way, board members must follow the requirements under state laws and the governing documents. This process generally involves the following steps:
- Create the Budget. The budget should tell the board whether an increase is necessary in the first place. This will also show homeowners where the dues are allocated.
- Approve the Budget. The board must approve the budget at an open board meeting or annual meeting. The meeting must follow proper notice and agenda requirements.
- Send Notice. Boards must notify members of the increase before it takes effect. This notice must include the new amount, the effective date, a summary of the budget, and the reason behind the rise.
- Vote. If the increase requires homeowner approval, a vote should take place. More often than not, only the board will need to vote to pass the increase.
- Document Everything. Meeting minutes should reflect the discussion, actions, and votes regarding the HOA fees increase.
Beneficial to Everyone
A HOA fees increase can be surprising to homeowners, but knowing the reason for it can help them come to terms with the decision. Board members should follow all notice, voting, and planning requirements according to state laws and their governing documents. This can put homeowners’ minds at ease.
Keymont Community Management offers expert management services to associations in Virginia, Maryland, and Washington, DC. Call us today at 703.752.8300 or request a proposal to start your journey!
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