How much HOA fee is too much? It depends on what the community needs and what it actually costs to run it well. Some associations charge more because they offer more services. Meanwhile, others charge more because they face rising costs or poor planning. Boards should review a few key factors before assuming fees are too high.
How Much HOA Fee is Too Much?
Homeowners associations collect dues to pay for shared expenses that benefit the community. These costs can include landscaping, insurance, utilities, management, repairs, and reserve funding. In most communities, the board is responsible for setting the budget. That budget is then used to calculate dues.
A fee becomes “too much” when the association charges more than the community truly needs, or when the board fails to justify the cost. That said, a sudden increase does not necessarily mean the board acted unfairly. It could mean that the association has more expenses to pay for or an underfunded reserve to catch up.
Still, boards should always be able to explain the reasoning behind increases. They should keep homeowners in the loop to avoid confusion and disputes.
Is There a Limit on HOA Fee Increases?
Whether an HOA has a limit on fee increases depends on two things: state laws and the governing documents. Virginia law does not set a universal percentage limit on how much dues can rise. Boards should refer to their CC&Rs and bylaws for specific caps.
Some communities require homeowner approval for increases above a certain amount or percentage. Others allow the board to raise dues as long as there is a properly adopted budget. Increases should always follow proper procedures and notice requirements.
For condominiums, similar rules apply. The governing documents and the adopted budget should guide the board’s decisions on fee increases.
Why are HOA Fees so High for Condos?
Condo fees often run higher because the association covers more shared responsibilities. Condo owners may pay for exterior building maintenance, roofs, hallways, elevators, and structural repairs.
The association may also need to ensure major parts of the building. These costs are usually higher than those in a typical single-family community.
Additionally, condos require more frequent professional services. Many condominium associations pay for building inspections, security systems, fire safety equipment, and common area cleaning. Elevator maintenance and fire protection systems can also cost a lot each year. These costs can add up and affect dues calculations.
Another major factor involves reserves. Condo associations need stronger reserve funding to cover major replacements. Owners may feel frustrated over high condo dues, but they do serve an important purpose.
Do HOA Fees Go Up Every Year?
Association fees often increase because expenses rise over time. Costs can jump, from insurance premiums and vendor pricing to utility costs and professional fees. Some boards may be tempted to keep fees artificially low, but this can result in budget gaps and special assessments.
Many associations raise dues every year with small increases. This approach helps keep the budget stable and homeowners’ dues manageable. Other associations raise dues every few years, but this only works for smaller communities with fewer needs. It is generally recommended to review the budget annually and make adjustments accordingly.
How to Lower HOA Dues
Low dues are not always a good sign. They can signal weak planning, delayed maintenance, or poor reserve funding. A board that avoids increases can create more serious financial problems later on.
That said, boards can lower dues without sacrificing quality. Here are the strategies worth implementing.
1. Renegotiate Vendor Contracts
Boards should review vendor contracts at least once a year. Some communities keep the same vendor for a decade without checking pricing, but even the simplest evaluation process can reveal better options. Boards can also ask current vendors for updated pricing and negotiate with them.
2. Reduce Landscaping Expenses
Landscaping often takes a big portion of the budget. Boards can reduce costs by adjusting service frequency. They can also go for simpler plant choices and low-maintenance landscaping. Additionally, investing in a smart irrigation system can save money on water bills.
3. Implement Energy-Saving Technology
Associations can reduce energy costs by using LED lighting, smart timers, and efficient pumps. Communities should also consider upgrading their clubhouse thermostats and pool equipment.
4. Defer Non-Essential Projects
Board members should learn to distinguish between needs and wants. Some projects can wait one more year if the budget isn’t enough to cover them. For example, if a change is purely cosmetic, the board can probably stand to delay it until there’s more room in the budget. Safety repairs and major replacements, on the other hand, should be prioritized.
5. Minimize Delinquencies
Delinquencies can have a domino effect on an association’s finances. When too many owners default on their dues, others are forced to pay more to cover the shortfall. To avoid this, boards should follow a strict collection policy and enforce it consistently.
What Homeowners Can Do
While it is the board’s job to set dues, homeowners are not left entirely powerless. There are some steps owners can take to better understand fees.
- Compare Fees. Owners can look at similar communities in the area to compare their fees against their own. This will give them an idea of whether their dues are normal or unusually high.
- Review Financials. Owners can review the association’s financial records to see where the board is spending its money. In Virginia, homeowners have a right to inspect and copy the association’s financial records (Section 55.1-1815).
- Attend Meetings. Homeowners should attend board meetings to better understand how the board makes decisions. Boards often explain the reasons behind increases at these meetings. Owners can also provide input and ask questions.
- Get Involved. Aside from attending meetings, owners can facilitate change by joining a committee or running for a board position. Serving on the board will give owners direct influence over the association’s finances.
How Much HOA Fee is Too Much?
In an HOA, fees must meet the community’s needs. They must not be so high that the board can no longer justify them. At the same time, they must not be so low that they jeopardize the association’s maintenance and operations. In the end, the board should practice open communication to ensure transparency and reduce conflict.
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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