Three things are certain in the world of community associations: death, taxes, and HOA fees!
As an HOA resident, you have no choice but to pay these fees every month. They're built into the community's covenants, conditions, and restrictions.
You probably have a few questions about HOA fees. Who's responsible for billing and collection? What happens if a property owner fails to pay? Can the fees be increased or reduced?
We have the answers to these questions and more, so read on!
Who Sets HOA Fees?
By the time you're buying a home in an HOA community, you'll find the HOA fee has already been set. Buying an HOA property means you're agreeing to follow the CC&Rs, so by default, you'll have to pay whatever amount the community requires every homeowner to pay.
It might appear unfair that somebody, or some people, set the fees without your input. Surely, as a homeowner, you deserve to have a say on how much you're willing to pay.
First, an HOA board is responsible for setting, billing, and collecting these fees from every household. The board is comprised of residents who have been elected to serve.
It has to act in the best interests of the community. It'll set a fee that's fair to everyone and reflective of market rates and the amenities in the community.
Can HOA Fees Be Adjusted?
The short answer is yes. HOAs fees aren't etched in stone.
The long answer is the board can't adjust the fees on their whims. Your HOA's CC&Rs provide for how the fees can be adjusted, and in most cases, the residents have to sign off on it.
A few factors can impact how often, and by how much, the fees can be adjusted, but inflation is the main culprit. As the value of the dollar depreciates and the prices of goods and services rise, it's investable the HOA will need to increase the fees.
Management of HOA Fees
You might be paying about $500 a month to your HOA, which, in the bigger scheme of things, looks like a drop in the ocean. However, multiply the amount by the number of households in the community, and the total amount the community collects monthly and it becomes serious money.
If there are 1,000 households, the HOA is collecting $6 million annually!
Now, can the board be entrusted with these funds? How sure can homeowners be that the funds won't be embezzled?
HOA boards have a fiduciary duty, meaning they have a legal responsibility to manage the funds in the best interests of the community. However, cases of embezzlement, corruption, and kickbacks in HOAs aren't uncommon.
HOA Fees: Know What You're Paying For
HOA homeowners have to pay HOA fees. But they also have a legitimate expectation that the funds will be put to the betterment of the community.
Most HOA boards turn to professional association management companies for HOA fee collection, budgeting, and other accounting services.
If you live in a Phoenix HOA that's looking for a management service, look no further than PMI Camelback. Our company is part of an experienced national property management franchise, but it's locally owned and operated. Call us to learn more about our services.