How are Homeowners Association Fees Determined?

These homeowners want to know how their homeowner association fees are determined for a large neighborhood that restricts access to some areas the association maintains.

Q: Hi, I enjoy reading your column in our local newspaper. I live in a homeowner’s association that is aggressive. We have around 250 homes and some of the homes are on a lake that the association maintains. But homes that are not on the lake do not have access to it. Should the association dues be different for homes that are on the lake and restricted by private property? We all pay the same annual association dues of about $500.

A: Good question. Here’s the bottom line: When you live in an association, some things aren’t fair.

Usually, the association documents set up the fee structure and the developer of the association has some discretion about how to set up the documentation and how the fees will get paid. Your question poses an interesting issue: You are considering the lake as an amenity that only benefits the homeowners that live along the lake.

You should know that for many developments, lakes and other water detention or retention areas are necessary for the proper drainage of water for the entire community. From this point of view any maintenance to the water drainage systems would be necessary for the benefit of the whole development. We can see how a developer would cause the association to have the responsibility of caring for those water features and have every homeowner share in that expense equally.

As a separate issue, the developer can also create a fee structure for certain uses that create additional fees for the association members. For instance, if the homeowners on the lake have boats and those boats create additional expenses for the association, the association can charge a fee for having boats or using boats in the lake. Having said that, and given that your annual dues are around $500, we would think that the association is probably spending most of the money maintaining the lake for its drainage properties.

If your numbers are accurate, your homeowners association takes in around $125,000 a year. That doesn’t seem like a lot of money, given that lakes and other drainage systems in developments often need annual maintenance and, in some years, major maintenance to keep the water flowing properly through the development.

So, on balance, if the intended need for the lake is for drainage purposes, it’s probably proper for the fees to be the same for all homes. And, if you live in a state where you pay property taxes, we’ll assume that the homes on the lakes sell for more than other homes and those homes will then pay higher property taxes due to their higher valuation.