Many HOAs experience extreme pushback when trying to raise monthly HOA assessments or add special assessments. As a result, it may be tempting to raise these funds by charging extra fees for amenities or other services in an effort to avoid angry residents. This article will take a look at the topic of extra fees, how they can impact your community, and things you should consider before adding a fee.
The very first consideration you should be thinking about is whether adding these fees is legal in your state. There are actually states, such as California, that prohibit charging residents fees for anything that is not connected to the cost. For instance, if the association has an unexpected maintenance cost, extra funds can only be obtained using special assessment fees which will go directly to the project. Check first with your state laws to see if charging extra fees is legal.
The second consideration is whether your governing documents have any directions on the topic. There may be very specific guidelines in the documents regarding which types of fees you can charge. If neither the governing documents or state laws explicitly prohibit the use of extra fees, your board is free to decide what is best for the community.
Types of Extra Fees
There are a few different types of fees that HOAs use to earn extra revenue. The first type is fees for use of an amenity. The second type is enforcement fees. The first charges residents for the use of common areas such as the clubhouse or pool. Associations should be very careful when deciding to add a fee for residents to use their own amenities. Usually the assumption of a homeowner is that these amenities are there for their use as part of their monthly HOA fee. Adding a fee to use the pool or even the clubhouse for a birthday party may give the impression that you are taking advantage of residents. Even if legal, this type of fee should be generally discouraged.
The second type provides consequences for residents who do not follow the governing documents. Fees can be attached for late assessments or repeated offenses against the Rules and Regulations. This type of fee is usually more acceptable as warnings are given to residents before fees are even levied and they are seen as a natural consequence of behavior.
Raising Funds Creatively
There are many ways to raise funds that do not add an extra financial burden to homeowners. Even in states that prohibit extra fees, it is usually allowable by law to charge individuals or groups outside of the community to use your facilities or amenities. You can open up your clubhouse or property to weddings or parties and charge a fee to raise money. You can even rent out parking spaces or storage areas to individuals outside of the community.
Thinking outside of the box can help your association raise money without burdening homeowners with higher and higher assessments, or fees for things that they should already be enjoying as part of their current assessments. It is a good idea to proceed carefully and consider all of your options, both legally and practically, before trying to add on extra fees.