Homeowners Association (HOA) fees are more than just a monthly bill for residents in a community. There is a rhyme and a reason behind these fees. A planned community with some shared ownership can charge an HOA fee. While planned developments are less prevalent in Massachusetts than in Florida, we see condo fees in our many condominium complexes. HOA fees and Condo fees are used synonymously when talking about condominium complexes. But they are essentially the same.
We will examine what an HOA fee is, what it may cover and how it is managed. If you are paying a monthly HOA or Condo fee, it is essential to know what is included.
And, if you are thinking of buying or selling a Massachusetts home in a planned community, it is essential to understand the structure of the homeowners’ association and the HOA or condo fees they charge.
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Breaking Down HOA Fees
Common Ownership
Before we break down HOA fees, we will discuss common ownership. The common ownership of a planned community or condominium complex generally creates the need for HOA fees.
Common ownership in a planned community or condominium complex refers to the parts of the property owned collectively by all the community members rather than by any individual owner. This typically includes areas and facilities that are meant for everyday use or benefit, such as:
Common Areas: These are spaces within the community that are accessible to all residents but owned collectively. Examples include green spaces, playgrounds, swimming pools, gyms, clubhouses, water drainage, runoff areas, and pathways.
Structural Elements: In a condominium, this often includes the building’s exterior walls, roofs, hallways, and other structural components that are not part of any single unit.
Land: The land upon which the buildings and other structures are built is usually part of the common ownership. This ensures that no individual member can claim ownership of the land to the exclusion of others.
Utilities and Infrastructure: Shared utilities and infrastructure like sewage, water lines, and sometimes heating and cooling systems can also be considered part of common ownership, depending on the specific rules of the community.
Common Ownership Requires Management and An HOA Fee
These common areas and facilities’ management, maintenance, and repair are typically handled through a homeowners’ association (HOA) or condominium association. Every unit owner is usually required to pay fees or dues to the association to cover the costs associated with these responsibilities.
The rules governing the use of common areas and the joint ownership management are outlined in the community’s governing documents, such as the declaration of covenants, conditions, and restrictions (CC&Rs), bylaws, and articles of incorporation.
The concept of shared ownership ensures that all community members enjoy the benefits of shared spaces and facilities while sharing the responsibilities and costs of maintaining them. It’s an essential feature of planned communities and condominium complexes, facilitating a structured approach to communal living and property management.
The Anatomy of HOA Fees
Your Condo or HOA fees are calculated based on the community’s annual budget, which includes maintenance of common areas, amenities upkeep, insurance policies, and reserve funds for future projects or emergencies.
In a condo community, your portion of your HOA fees is based on the percentage of the square footage of your unit compared to the entire individually owned square footage. In a planned community, it could be split equally between all the properties.
Condo fees are commonly paid monthly, but HOA fees could be quarterly or yearly in a planned neighborhood of single-family homes.
The Need For An HOA Fee
When you are a member of a Homeowner’s Association, and there is joint ownership, you need to maintain the common areas, including the cost of taking care of these areas. Your HOA fee fulfills the yearly budget to cover the cost of managing the common areas.
What Can A Monthly Condo Fee Include
Master Insurance
Landscaping and lawn maintenance
Trash Removal
Snow Removal
Interior common areas like elevators, lobbies, and hallways.
Maintenance of standard amenities like clubhouses, gyms, pools, tennis courts and more….
Common Utilities
Exterior maintenance could include roofs, siding, decks, patios, driveways and roads.
Water drainage areas.
Reserve Funds: 10-30% of your HOA fee is allocated for reserve funds to address emergency repairs and long-term capital improvements.
Professional management company.
The needs of an HOA can vary, and what is covered by the condo or HOA fee will be equally varied. Some condominiums include all the utilities for every unit.
Before deciding to buy a condo or a home in a planned community, ensure you understand what your fees are covering.
What Is The Average Massachusetts Condo Fee or HOA Fee?
As pointed out earlier, different needs exist for different community’s HOA fees. One will be for a planned community of single-family homes and one for condo complexes. The need for a condominium complex vs a neighborhood of houses. Fees can vary greatly depending on the needs of the community, the age of the community, and the amenities provided.
The Average Cost Of A Massachusetts Condo Fee
Taking the average cost of the Essex, MA Condominiums that sold in the last six months out of the Massachusetts MLS, for 981 condos, the average condo fee was $386 a month. Ranges were from 0 to $2900 a month. The price range of the condos was from $125,000 to $3,300,000.
The Average Cost Of A Massachusetts HOA Fee
This is for homes that are in a planned neighborhood that have association cost to maintain a private road, a community entrance, and water drainage areas. HOA fees for single-family homes were harder to determine on average.
In Essex County 77 homes were in an HOA in the past 6 months. The MLS does not provide an easy way to average the HOA fee. I physically opened a large selection of listings and saw a yearly fee of $300- $800 a month.
Benefits of Your HOA Fees
Enhancing Property Values
One of the key advantages of paying HOA fees is the direct impact on property values. Well-maintained common areas and amenities significantly contribute to the attractiveness and marketability of homes within a community or complex.
It provides one cohesive look that residents can be proud of.
Access to Premium Amenities
HOA amenities and services provide residents with access to facilities that might be unaffordable or unavailable in non-HOA communities, such as fitness centers, clubhouses, business centers and gated security.
Many buyers like the opportunity to tap into amenities that might not be available if purchasing a single-family home due to cost.
Enforcement
With HOA fees comes a governing body. If one of your neighbors is not complying with the rules and regulations of your community, they are tasked with enforcing the rules and providing peaceful enjoyment for everyone.
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Effective HOA budgeting ensures that funds are allocated wisely, keeping fees stable while still providing for the community’s needs and fulfilling its budget. A well-funded reserve is crucial for addressing unexpected repairs or future planned repairs without imposing special assessments on homeowners.
Transparency and Homeowner Involvement
A well-run Homeowner’s Association should be transparent and build trust within the community. Regular financial reports and open board meetings encourage homeowner involvement and provide opportunities for feedback and suggestions.
Getting involved gives you a say in how your HOA spends its money. Participate and don’t just sit back and complain if you took no time to understand the issues and get involved.
Managed Maintenance
Ownership in a community with an HOA fee also means the maintenance is managed for you. You don’t need to worry about lining up contractors, making sure the job is done correctly, or managing the monies involved.
Interior Maintenance Is The Responsibility Of The Unit Owner
HOA fees cover common areas only. They do not cover interior maintenance. The interior of your unit or the entire home in a single-family development will be your responsibility.
Typically, in a condominium complex, you are responsible for any maintenance from inside stud to inside stud in your unit, including windows and doors. Interior plumbing, electrical, and HVAC will be yours to maintain. It is essential to read the documents and understand what is covered by the HOA and what is not.
HOA Policies and Homeowner Responsibilities
Navigating HOA Policies
A clear understanding of HOA policies helps homeowners navigate the dos and don’ts within their community, from exterior modifications to pet restrictions, ensuring harmony and compliance.
Everything about the structure, rules and how a budget is formed is spelled out in available documentation.
It is essential to review all the documents associated with an HOA, including the Declaration of Trust, Bylaws, Rules and Regulations, Covenants and Restrictions, and the Master Deed.
Everything about the structure, rules and how a budget is formed is spelled out in available documentation.
The Importance of Compliance
Adhering to HOA policies avoids potential fines and contributes to the community’s collective well-being, ensuring that it remains a desirable place to live for all residents.
FAQs on Navigating HOA Fees and Policies
Dealing with Fee Increases
Fee increases are a common concern among homeowners. Understanding the factors driving these increases, such as inflation or unexpected repairs, can help mitigate concerns and foster a proactive approach to financial planning within the HOA.
Participating in regular meetings and reading newsletters keeps you informed of what is going on in your community including the finances.
Challenging HOA Decisions
Suppose homeowners disagree with an HOA decision or fee. In that case, engaging constructively with the board, attending meetings, and proposing alternatives based on a thorough understanding of the HOA’s financial situation and policies is essential.
The condominium documents will spell out how changes are made and will also have a mechanism to challenge those decisions.
Maximizing the Value of Your HOA Fees
To maximize the value of HOA fees, residents should take full advantage of the amenities and services provided, participate in community events, and volunteer for committees or the HOA board.
Selling A Home With An HOA Fee or Condo Fee
Selling a home or condo with an HOA (Homeowners Association) or condo fee involves a few extra steps and considerations compared to a property without one. it doesn’t have to be complicated. By being prepared, transparent, and highlighting the benefits of community living, you can make your home stand out to potential buyers. Remember, for many, the advantages of having an HOA take care of the exterior and common areas, along with the amenities provided, can be a significant selling point.
What Sellers Need To Know
Understand the Fees: Be clear about how much the HOA or condo fees are, what they cover, and when they’re due. Buyers will want to know this upfront as it affects their budget.
Gather Important Documents: Buyers will likely ask about the HOA’s financial health, rules, and regulations. Have the following documents ready: the declaration of trust, master deed, bylaws, covenant, conditions and restrictions (CC&Rs), recent financial statements (including reserve funds), minutes from the last few HOA meetings, and any upcoming assessments.
Assessments and Special Fees: If there are any pending assessments or known future expenses, disclose these early. Buyers must be aware of additional costs that could affect their decision or negotiation strategy.
Highlight the Benefits: Don’t just focus on the fees. Highlight what those fees bring to the table—amenities like a pool, gym, landscaping, snow removal, and maintenance can be huge selling points.
Compliance with HOA Rules: Ensure your home is in compliance with all HOA rules and regulations before listing. Address any violations or pending issues to avoid delays or complications during the sale.
Capitalize on Community Living: Emphasize the sense of community, security, and convenience of living in an HOA-managed property. For many buyers, these are significant advantages.
Be Prepared for the HOA to Get Involved: The HOA may want to review and approve the sale details. In some cases, they might also have the right of first refusal, so be prepared for this step.
Disclosures are Key: Full transparency about the HOA or condo association is crucial. Hidden surprises regarding fees, assessments, or stringent rules can derail a sale at the last minute.
Consider the Market: Understand how your HOA or condo fees stack up against similar properties in the area. If your fees are significantly higher, be prepared to justify this with the amenities and services provided.
Buying A Home With An HOA or Condo Fee
It seems you’re asking what a homebuyer should know about buying a home or condo with an HOA (Homeowners Association) or condo fee, so let’s dive into that. When you’re stepping into the market for a property that’s part of an HOA or has condo fees, there are several key points to keep in mind:
What Buyers Need To Know
Understand the Fees: Know the monthly or annual HOA or condo fees before you buy. It’s crucial to understand the cost and what services and amenities these fees cover. This could include landscaping, snow removal, maintenance of common areas, and access to facilities like pools or gyms.
Review the HOA Documents: Dive into the CC&Rs (Covenants, Conditions, and Restrictions), bylaws, rules and regulations, declaration of trust, master deed and recent meeting minutes of the HOA. These documents will give you a clear picture of the community rules, any upcoming projects, and the financial health of the HOA.
Check the Reserve Fund: A healthy reserve fund is a good sign of a well-managed HOA. It means there’s money set aside for future repairs and maintenance, reducing the risk of unexpected assessments.
Assessments and Special Fees: Find out if there are any pending assessments (one-time fees for major repairs or improvements) on top of the regular fees. You’ll want to factor these into your budget.
Compliance and Restrictions: Understand what the HOA rules mean for you. This can include restrictions on renovations, pet policies, and even the color you can paint your front door. Make sure these rules align with your lifestyle and plans for the property.
Potential for Fee Increases: HOA fees can increase over time. Look at the history of fee increases to gauge how stable your future expenses might be.
Insurance Coverage: Understand what the HOA’s insurance covers and what you must insure separately. This can impact your insurance budget.
Dispute Resolution: Know how disputes within the community or with the HOA board are handled. It’s good to understand the process in case you ever need to address issues.
As a Massachusetts REALTOR, I often run into homeowners who automatically reject the purchase of a condominium as they don’t want to pay a monthly HOA or Condo Fee.
Are HOA Fees Ridiculously High?
Some homebuyers don’t want to pay a condo fee because they think they are ridiculously high. Let’s look at that and see if it is true or not.
Conventional wisdom is that if you own a single-family home, you will spend 1-3% of its value in maintenance. Haverhill, MA, condominiums sold for a median price of $379,500 in the past year. That would mean if it were a single-family home, you would spend $3,800 to $11,400 a year on maintenance.
The average condo fee over the past year in Haverhill was $326 a month or $3,912 a year.
Real-Life Scenario Of The Cost To Maintain A Property Compared To an HOA Fee
I live in a 1700 sq. foot home with under 5,000 square feet yard. I certainly did not track my expenses, but I will go through some of the home maintenance I spent money on this past year.
Roof Repair $750– Shingles blown off that needed to be replaced.
Tree Removal- $750 We had a tree too close to the house that needed removal.
Yearly Landscaping- $450 Every year I spread fresh bark mulch and provide new planting in our garden beds.
Lawn Maintenance- $1800 While I mow the lawn, I have a company that provides the fertilizer and other services, including aeration and reseeding every year.
Deck Maintenance- $450 Includes the chemicals and materials to strip the deck and re-stain the decking.
Insurance- $1200 Most, if not all, of your yearly insurance will be covered by your condo fee.
Equipment Servicing $200 After five years of owning a snowblower I had it serviced onsite.
Other Items- I am not putting a cost on a bunch of items, but as I think over the past year there are certainly other costs. Like, replacing 7 split rails on a fence, weed and animal control for the gardens, new lawnmower blade, water to water the lawn, replace railing on the deck and much more….
The total is $5600 or if broken down monthly, $467. The list is all items that a typical condo fee would cover. And, on top of it, there are $1000s of additional costs I did not mention.
Reserve Funds and Your HOA Fee
Think of a reserve fund as a savings account, but it’s not for an individual—it’s for an entire homeowners’ association (HOA) or a condo complex. This fund is all about being prepared for the future, specifically for those big-ticket maintenance tasks or unexpected repairs that can pop up over time.
Of course, a planned community with very little to maintain will not have a reserve fund. But a community like a condominium complex will set aside a minimum of 10% and up to 30% or more depending on projected future needs.
Many lender also require a minimum amount of reserves to provide financing of a condo.
Like you might put money aside for a rainy day, an HOA collects a bit from everyone’s monthly or annual HOA fees and tucks it into this reserve fund. The idea is to have enough cash on hand so that when something big needs fixing or replacing, the community doesn’t have to ask everyone to cough up a ton of extra cash suddenly. It’s about financial stability and planning ahead.
Having a healthy reserve fund is a sign of a well-managed property. It means they’re thinking ahead, managing finances wisely, and prepared to handle the ups and downs of property maintenance without panic. For homeowners, it’s peace of mind knowing that there’s a plan in place for keeping everything in top shape, which helps protect the value of their investment, too.
Are Condo Fees Unnecessary and Too High?
After reading this, are condo fees too high? The difference is with a single-family home, it’s not a steady and recurring fee.
In some months, your maintenance cost may be close to zero, whereas in another month, you may have a roof replacement that costs $9500. While condo fees might be a tough pill for some home buyers, you will spend that and much more on a single family home.
Having An Impact on HOA Fees
As a member of an HOA, you can have a meaningful impact on HOA fees.
First, have a complete understanding of how your HOA runs and is governed. Understand the yearly budget and the rules and regulations.
Once you have an understanding become involved in your association. Start by showing up at meetings and finding out what is going on and express your opinion. Be available to vote for issues involving your community, especially financial ones.
Consider becoming a board member where you can impact decisions early on in the decision-making process.
What Happens If I Don’t Pay My HOA Fees?
If you’re living in a condo and start skipping out on your condo fees is a problem that snowballs—it might not seem like a big deal at first, but it can lead to some pretty severe problems down the line.
Condo fees are essential for maintaining and managing the communal and shared areas in your neighborhood, building or complex. They cover everything from keeping the lights on in common areas to ensuring the pool is clean and the garden is well-kept. So, when you don’t pay these fees, it doesn’t just affect you but the entire community.
The initial consequence of not paying your condo fees is usually a series of reminders and late fees. But if the situation drags on, the condo association can take more drastic measures.
This can include legal action, and in some cases, they might even place a lien on your property. A lien is a legal claim against your condo for the amount owed, and it can make it incredibly difficult to refinance your mortgage or sell your property.
In extreme situations, the association might pursue foreclosure to recover the unpaid fees. Yes, it’s that serious. Keeping up with your condo fees isn’t just about staying on good terms with the neighbors; it’s crucial for maintaining your investment and avoiding a financial and legal headache.
In Massachusetts, Delinquent HOA Fees Are Super Liens
If an association puts a lien on your property in Massachusetts, it is considered a super lien. It jumps over all other liens and becomes the priority lien on your property, even over a first mortgage.
This guarantees that no matter what is owed on a property, the HOA fees and legal fees get paid first if the association forecloses or any other lien holder files for foreclosure.
FAQs About HOA Fees
What are HOA fees?
HOA fees are monthly, quarterly, or annual charges that homeowners must pay to their homeowners association. These fees are used to cover the costs of maintaining and improving properties in the association, including common areas such as pools, parks, landscaping, community centers, and sometimes utilities or insurance.
What do HOA fees cover?
The specific services and amenities covered by HOA fees vary by community but typically include maintenance of common areas, trash removal, snow removal, and repairs. In some communities, HOA fees also cover utilities like water, sewer, and cable, as well as amenities such as gyms, pools, and security services.
How are HOA fees determined?
HOA fees are determined by the homeowners association based on the annual budget needed to cover the community's operating expenses and reserves for future repairs or replacements. The fee amount may be influenced by the size of the community, the level of amenities offered, and the cost of maintaining the property.
Can HOA fees increase?
Yes, HOA fees can increase. Associations may raise fees to cover rising costs of services, inflation, unexpected expenses, or to build reserves for future projects. Most associations have guidelines for how and when fees can be increased, often requiring a vote from the homeowners.
What happens if I don’t pay my HOA fees?
Failing to pay HOA fees can result in late fees, interest charges, and legal action. The association may place a lien on your property, which can lead to foreclosure in extreme cases. It's important to stay current with these payments to avoid such consequences.
Are HOA fees negotiable?
Typically, HOA fees are not negotiable because they are set by the homeowners association based on the budgetary needs of the community. However, if you're purchasing a home, you can sometimes negotiate with the seller to cover some or all of the HOA fees for a certain period as part of the sale agreement.
Conclusion: The Role of HOA Fees in Community Living
HOA fees are a cornerstone of community living, providing the necessary funds to maintain and improve the quality of shared spaces and amenities.
By understanding the details behind these fees, their benefits, and the management of HOA finances, homeowners can play an active role in their community, ensuring it remains a desirable place to live while safeguarding their investment.
Engaging with HOA policies and governance helps navigate the complexities of community living and empowers homeowners to contribute positively to their community’s future.
Author Bio
Kevin Vitali is a Massachusetts REALTOR out of Haverhill MA that serves Essex County and Northern Middlesex County in Massachusetts. If you want to buy or sell a home, let me use my years of experience to get you the best possible outcome.
Feel free to contact me to discuss any upcoming moves. I am always happy to answer your questions
