Why do HOAs collect monthly dues from homeowners?

An HOA is responsible for completing various projects on behalf of its community members. For many such projects, there is a necessary financial cost, such as paying a landscaper to maintain a community garden or a repairman licensed to fix an elevator. The HOA will collect money from homeowners on a monthly basis to cover such costs; in many cases, the dues collected exceed the given month’s costs, where the extra dollars contribute to a reserve fund to account for future (and often unexpected) costs outside of the operating budget set forth by the HOA’s board of directors.

The fees encountered by homeowners in an HOA are stated in the CC&Rs, and remain a fixed cost unless the board of directors deems it necessary to increase or decrease the amount. Residents in the United States can expect to pay an average of $300 per month, but dues can range from as low as $100 to thousands of dollars per month depending on the HOA’s financial needs. Both the locale and the community’s expectations will heavily influence this number.

For example, a planned development of single-family homes in an Arizona suburb might require dues of $150 per month to cover basic common needs such as trash collection with little else. On the other hand, a condominium in San Francisco with a doorman, a rooftop pool, a parking garage, and building-wide heating and cooling might demand homeowners to pay $2100 each month in order to pay for these services and facilities. These HOAs, regardless of locale, typically will distribute total collected dues such that ~⅔ of the funds go to an operating budget, while the other ~⅓ goes into reserves as mentioned before.