The Homeowners Association (HOA) covers various community fees. From maintaining common spaces like pools or tennis courts to hosting community events, HOAs have an important role, but it also means those who live nearby must pay.
When you are a tenant, there can be some confusion as to who pays the HOA dues (whether they are annual or included in the monthly rent). As a landlord, it’s up to you to decide. To help you make your decision, it’s important to understand the regulations and tenant expectations regarding this issue.
What are management fees?
HOA dues cover everything needed to maintain and improve the common parts of the community, and average between $200 and $300 per month (if your community is zoned that way). If you live near a single-family home, you may also be subject to annual HOA fee assessments. Costs may vary from year to year depending on what projects need to be completed and whether there is a surplus available to deal with unexpected problems.
Most HOA fees cover community-shared amenities, which can include:
- General maintenance
- Landscaping of public areas
- nameplate
- Insurance and Facilities Utilities
- Gates
Amenities often include any combination of swimming pools, tennis courts, clubhouses, fitness centers, parks and even nature trails.
HOA fees depend on many factors specific to each community, so it’s hard to argue that the assessment is too high. The number of amenities and your location are two major factors that influence the total, but they are not the only factors.
Regardless of price, the purpose of HOA fees is the same almost everywhere. They exist to keep the community functional and attractive.
Other HOA Responsibilities
In addition to raising funds and managing the common areas within a community, an HOA is responsible for enforcing certain standards set by the community. It is a legal body, so it has a board of directors, regular meetings, and voting structures to approve changes, budgets, and things of that nature.
Standards are often referred to as deeds, and when you purchase a property in a community with an HOA, you will typically receive a checklist. These can be very detailed to keep a consistent look throughout the neighborhood. They can also be more relaxed, covering only areas that don’t belong to any one house.
Many people buying real estate like to have an HOA because of the impact it has on the property value. Stricter rules regarding maintenance and appearance can help keep the overall condition of the home in better condition, which can have a positive impact on the sales price when the time comes.
How does an HOA affect my rental property?
Since HOA fees are mandatory, either you or your tenants must pay them. No matter who pays, you are responsible for enforcing the community rules. For example, if your HOA requires specific front yard maintenance, you’ll want to let your tenants know they can’t neglect things like mowing the lawn.
The best way to educate tenants about your HOA is to share any guidelines or governing documents with them. This includes those itemized expenses. You’ll also want to include language in your lease that explains tenant responsibilities and the consequences of not complying with the HOA bylaws.
Do tenants need to pay HOA fees?
Ultimately, the choice is up to you. Some landlords pay the fees themselves. This is the best way to ensure your fees are always paid on time. Others are asking tenants to pay. This can happen in one of two ways:
- The tenant pays the HOA dues to the landlord, who then pays the HOA
- Tenant pays HOA directly
Your HOA bylaws may dictate what options are possible, but regardless, any information regarding the tenant’s payment of HOA fees must be included in the lease agreement. If you omit this information from your lease, you legally cannot go back and demand payment from the tenant when the fee is due.
What should be included in a lease
If you require your tenants to pay HOA fees, you will need to create a separate section in your lease that addresses this responsibility. Language should state that HOA fees are the responsibility of the tenant. Also include specific details such as the amount of the fee, when and how it will be paid, and the consequences of non-payment.
Consequences are imposed by you and are beyond what the HOA itself might have in this situation. You might even consider delaying the due date of your HOA fees to avoid any consequences yourself.
It’s perfectly fine for your tenants to treat non-payment of HOA dues as an evictionable offense. From your perspective as a property owner, this is a very serious matter. You don’t want to be held responsible if you don’t actually pay.
Since HOA fees can change from year to year, be sure to review and update this section each time you sign a new lease or renew with your current tenant. An addendum can also be added to the current lease if things change regarding the HOA’s fee structure.
What are the penalties for not paying?
The HOA’s bylaws will determine what happens if fees aren’t paid, but things can get tricky if you have tenants. If you’ve made your tenant responsible for payment and they don’t pay, you still have to face the consequences. This can mean everything from incurring late fees to dealing with liens on the property.
To avoid this, you may want to make the payments go through you, no matter who pays the HOA dues. This way you can track it. The easiest way is to include HOA fees in your rent. Break down the annual costs and roll them up into the monthly rent you charge, but let your tenants know this is happening. You don’t want them to question why the rent is high without understanding what it covers.
HOA fees are one of the most confusing parts of the landlord-tenant relationship. It’s not always clear who pays HOA fees, or the best way to do so. Since there is no right answer to this question, the best thing you can do is be clear about your expectations and build everything into the lease. It will prevent last minute issues and hopefully ensure HOA dues are never late.
