Can HOA fees increase? There are certain scenarios in which the homeowners’ association may decide to do so, especially as expenses rise. However, how often and by how much would depend on certain factors.
What are HOA Fees?
HOA fees or dues are the regular assessments that residents pay to a homeowners association. The money earned from these usually covers the costs the association needs to run and maintain the neighborhood.
When buyers agree to acquire property in an HOA community, they also agree to pay these regular fees. Residents can find this obligation set forth in their association’s governing documents.
Every year, the board will prepare the community’s budget. There, they will have to assess whether the current dues are sufficient to cover their operational expenses. If funds are lacking, the board may decide to increase fees to keep the association financially stable.
Can HOA Fees Increase?
There is always a possibility that your HOA dues will increase, especially if the community’s budget requires it. However, the board must ensure that the increases are consistent with both what the governing documents say and what state law prescribes.
Increases in your regular assessments are usually linked to higher costs. Inflation may affect the prices of goods and services, and vendors may change their service fees.
If they plan to raise HOA dues, the board must explain why it’s necessary.
Do HOA Fees Increase Every Year?
How often do HOA fees increase?
Regular dues don’t necessarily increase every year. Some HOAs may, depending on the situation, implement the increase annually. Meanwhile, others would only do so if the need arises.
Part of the HOA board’s duty is to review and create a community budget every year. In that review, they compare any projected income with estimated costs. If there’s a discrepancy in numbers, the board may have to approve higher fees.
Other additional factors that the board may consider include:
- Size: Smaller HOAs with few common amenities don’t necessarily need frequent increases. Since expenses are generally less. Larger associations, however, may have higher expenses.
- Age: Aging communities tend to have older homes and amenities that may require more repairs. As a result, assessments may increase.
- Reserve Fund Status: Having a well-funded reserve account means that your HOA has prepared properly. However, due to one reason or another, your HOA may not be as prepared. In an effort to reach a good reserve fund status, your HOA may decide to raise your regular dues.
There may be benefits to an HOA having smaller yearly increases, however. Doing it this way means residents won’t have to deal with a higher jump in their bills later on.
Of course, increasing them annually should still be properly justified. Residents need to be able to see and understand how the added money will be used and if it will be used properly.`
Is There an HOA Fee Increase Limit?
Typically, a limit on HOA fee increases exists and is indicated in your community’s governing documents or by state law.
In Oregon, there’s no single universal percentage limit on increases in HOA dues. However, they must provide a budget summary to all residents within 30 days of adopting the annual budget. This would help residents understand whether the increase was needed.
Since there’s no state law directly governing increases, residents should still check their governing documents. Some HOAs may have policies that limit or specify the acceptable rate of increase.
Regular Dues vs Special Assessments
When you’re part of an HOA, you typically pay the regular HOA dues or the occasional special assessments.
Regular HOA dues are recurring fees that residents pay to fund the association’s day-to-day operations. The amount for this is approved through the HOA’s budget process. They fund the HOA’s common and expected expenses.
Meanwhile, special assessments are considered extra charges. They’re typically levied for a specific cost that your annual budget doesn’t cover, usually involving emergencies or large projects. For approval, special assessments may need a homeowner vote.
How to Tell If an HOA Fee Increase is Reasonable
It would be easier for residents to accept and understand HOA fee increases if they align with the association’s financial needs. They need to see how the new amount is connected to the approved budget.
Reasonable HOA fee increases usually:
- Align with the HOA’s current expenses
- Consider future repairs and reserve needs
- Supported by the approved budget
- Come with a clear explanation from the board
- Comply with the governing documents and state laws.
How much was added to the fee should also matter. Usually, smaller increases are easier to justify since they only reflect normal cost changes. A large jump can still be valid, but only for the right reasons.
Can HOA Raise Dues Without a Vote?
For most homeowner associations, HOA fee increases can be done without a vote. The board can raise regular dues as part of the annual budget process.
However, this must be done with the proper process. They need to check the governing documents first. Some associations allow them to raise regular dues freely, while others require a vote.
They should also check state laws. Some places would have increased caps or require advance notice.
The need for a vote may be more common for unusually large increases. It may also be necessary to approve special assessments.
What Homeowners Can Do About an Increase
If a resident hears about a possible increase in fees, they should review the association’s budget to understand the reason. If they need clarification or have concerns, homeowners should attend board meetings and ask for explanations.
Some residents may find the increases too high. In that situation, homeowners should request access to their financial records. Such records usually show if the fee increase is based on real expenses.
Keeping HOA Fees Reasonable
HOA fee increases are not always welcome, but they are sometimes necessary. A well-funded association can maintain common areas, plan for repairs, and protect property values.
CWD Group offers management services to community associations in Oregon and Washington. Call us today at 503-488-2008 or contact us online to learn more!
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