Most homeowners usually complain about periodic fee increases by an HOA. While some homeowner complaints against higher HOA fees are justified, most HOA boards increase dues to maintain specific community resources. And generally, the more community utilities you have, the more you will have to pay.
Do HOA Fees Increase?
In a nutshell, yes.
Most HOAs increase their annual budget, but a second or third increase is mostly allowed under certain circumstances. On average, homeowners pay HOA fees of about $100 to $500 per month. However, these dues may go up to $2000 a month. It depends on the amenities, the size of your house, and the age of your home, among other factors.
Remember, homeowners associations have elected HOA board members who deal with hiring vendors, maintenance, and enforcing the community’s rules and regulations. In addition, they also have to deal with the challenging aspect of setting the annual budget. So, the HOA board must compute the following year’s maintenance and operating budget.
But, when you see an increase every year, you are probably asking: is it really necessary?
In most cases, HOA board members increase fees to meet inflation and attain the optimal reserve fund levels. Since they cannot control external economic and price changes, it makes more sense to be prepared.
How Often Do HOA Fees Go Up
Typically, the HOA board of directors increases homeowners association fees every year. Some HOA members (owners) may understand that this caters to changing times and inflation, but others may find it unfair.
That said, the major cause of HOA dues increases is the continuously rising cost of vendors and contractors. So, utilities, maintenance, and management costs usually take the lion’s share of many HOA’s budgets.
But if the fee increase seems unfair, homeowners may ask for transparency—depending on the state or your HOA’s bylaws.
Average HOA Fee Increase
So, what’s the maximum limit of HOA fee increases? For example, how much can an HOA raise dues in Louisville, Kentucky?
Some states, like Kentucky, don’t have a maximum limit on how much an HOA board can increase your fees. Currently, almost 190,000 homes in Kentucky are members of HOA communities. Still, the state doesn’t have a law dedicated to condominium and homeowners associations. That said, these associations are non-profit organizations that are subject to the Kentucky Nonprofit Corporation act.
Remember, the average fees vary from location to location, even in the same area. So, giving a clear-cut average for all communities is difficult. Therefore, you can consult a real estate broker familiar with the area’s HOA limits.
Also, you can get the community’s fee increase history directly from the HOA. This history can help you estimate future increases (Hire a financial advisor if numbers aren’t your thing).
How Much Can HOA Fees Increase Without Members’ Votes
Only a few states limit the amount that an HOA board can raise without members’ approval. For instance, in California, the board can hike the budget and increase members’ dues. However, HOA boards must give a 30 days notice and not exceed the 20% increase limit.
That said, the policy on homeowners’ approval varies from HOA to HOA. Each homeowner association may have its unique CC&R on how to raise fees. Some HOA CC&Rs may give specific yearly increases, say 10% yearly. They may also include the minimum number of members needed to petition against excessive increases.
Always read your HOA bylaws and CC&Rs carefully. Some may stipulate the rates clearly, while others don’t have any increase limitation.
Can an HOA Increase Fees Without Notice
It is advisable to know what your HOA stipulates in the CC&R and its bylaws. Usually, refusing fee increases (because you didn’t receive a notice) wastes your time and energy. The HOA board will just fix any misunderstanding and give you proper notice. So, it is better to preserve your energy and ask for the main reasons behind the increase in HOA dues.
Conclusion
Participate
HOA fee increases are significant for several reasons. Of course, it may feel unfair, but these increases are there to sustain a certain standard of living. And remember, the HOA directors also live in the same community and have to pay the same fee increase.
However, if you feel the funds are poorly managed, you can always ask to look at the budget, get involved, or participate in the next HOA board elections.
