A Community Manager Defines Association Dues
Having managed HOA communities for quite some time now, I see the same questions popping up repeatedly from homeowners all the time. One of the more frequent questions seems to be: What exactly are homeowners association dues? Are they rent? A mortgage? A fee for amenities? What exactly are they?
Just recently I was on the phone with a homeowner who was pretty upset that the dues at her association had yet again increased. This is getting ridiculous” she said to me, her voice stressed, frustrated and tired. “Did you know that my dues are now near 30% of my mortgage?”.
It was then that it hit me that this homeowner (and probably TONS of other homeowners) might not know exactly what association dues really are. She continued on by telling me that she was thinking of buying a house. Because there would be no dues to pay then.
“Fair enough”, I said. “But you will have maintenance costs. Insurance costs. Utility costs. Plumbing costs. Roof costs. Right?“ She agreed.
I also told her that it would be a good idea if, when she bought her home, that she put some of her cash away so that she can pay for those costs when they come up. She agreed again.
Well, it doesn’t take a rocket scientist to see the parallel I was drawing here. So What Exactly Are Homeowner Association Dues?
Let’s start by taking a look at what association dues aren’t. Association dues are not rent. They aren’t mortgages. And they aren’t payments to the management company. You would be surprised how many homeowners think that their entire association dues are payments to the management company or rent.
As much as the management company might like this, the truth of the matter is that association dues are not at all payments to the management company. They are there to facilitate a budget that the association has in place based on historical expense tracking. When a homeowner pays their dues they are planning ahead in a fiscally responsible fashion, making sure that the association (which they are a part of) will have the capital it needs when the circumstances warrant it. More specifically, the dues cover things like:
- Landscaping
- Common area utilities
- Repairs to common area plumbing and electric
- Insurance for common areas
- Pool maintenance
- Fire System maintenance
- Security and entry gate repair
And the list goes on! Just as if you owned a home and you put money aside to fix the roof, or do the landscaping or repainting.
If a homeowner doesn’t like how the capital is being allocated then it’s up to that homeowner to actively participate in their communities. They can become a member of the Board. They can attend the Board meetings. They can speak out and let their voice be heard.
Once I explained this to the homeowner she became less agitated and more understanding. “Why didn’t anyone tell me this before?” she said, incredulous. Which, of course, gave me an idea for a blog post. 🙂
Until next time…