Who is Responsible for Paying HOA Fees in a Rental Home?
Home Owners Associations (HOAs) cover a variety of neighborhood costs. From maintaining common spaces like a pool or tennis courts to hosting community events, the role of an HOA is important but it also means those living in the neighborhood have to pay.
When you're a renter, there can be some confusion as to who pays HOA fees, whether annually or included in the monthly rent. As a landlord, it's up to you to decide. To help you decide, it's important to understand the norm and renters' expectations around this issue.
What are HOA fees?
Covering anything included in maintaining and improving the common parts of the neighborhood, HOA fees vary, on average, between $200 to $300 per month if that's how your community breaks it down. You may also get assessed yearly for HOA fees if you live in a neighborhood of single-family homes. Costs can vary year-to-year based on what projects need to get completed and whether there's a surplus available to deal with unexpected issues.
Most HOA fees cover those amenities shared by the community and can include:
- General maintenance
- Landscaping in common areas
- Insurance and utilities for amenities
Amenities usually consist of any combination of a pool, tennis courts, clubhouse, fitness center, parks and even nature trails.
HOA fees are dependent on so many factors specific to each community, that's it's hard to say what's too high of an assessment. The number of amenities and your location are the two primary factors that impact the total, but they're not the only ones.
Regardless of the price tag, the purpose of HOA fees is the same almost everywhere. They're in place to keep the community functional and appealing.
Other responsibilities of an HOA
In addition to collecting money and managing common areas within the community, an HOA is responsible for enforcing certain standards set by the community. It's a legal body so there's a board, regular meetings and a voting structure in place to approve changes and budgets and things of that nature.
Standards are typically known as covenants and you're usually handed a list when you buy property in a neighborhood with an HOA. These can get extremely detailed to maintain a consistent look throughout the neighborhood. They can also be more relaxed, covering only those areas that don't belong to any one house.
Many people purchasing real estate like having an HOA since it can impact property value. The stricter rules around maintenance and appearance can help keep homes in better shape overall, which can positively impact sale price when the time comes.
How does having an HOA impact my rental property?
Since HOA fees are mandatory, either you or your renter will have to pay. No matter who pays though, it's your responsibility to enforce community rules. For example, if your HOA requires specific front yard maintenance, you need to let your renter know they can't ignore things like mowing the lawn.
The best way to educate your renter about your HOA is to share any guidelines or governing documents with your renter. This includes those that break down fees. You'll also want to include language in your lease that explains renter responsibility and the consequences for not maintaining HOA bylaws.
Do renters pay HOA fees?
Ultimately, this choice is up to you. Some landlords pay the fees themselves. This is the best way to ensure fees get paid on time, all the time. Others require their renters to pay. This happens in one of two ways:
- The renter pays the HOA fees to the landlord, who then pays the HOA
- The renter pays the HOA directly
Your HOA bylaws may govern which of these options is possible, but regardless, any information related to the renter paying HOA fees must get included in the lease. If you omit this information from the lease, you're legally unable to circle back when fees come due and demand the renter pay them.
What to include in the lease
If you're asking renters to pay HOA fees, you'll need to create a separate section in the lease that speaks to this responsibility. The language should state that HOA fees fall on the renter. Also include specifics, such as the amount of the fees, when and how they're paid and what the consequences are for not paying them.
The consequences are ones you enforce and are outside what may come from the HOA itself in this situation. You may even consider padding the due date for HOA fees to avoid any repercussions yourself.
It's perfectly OK to make not paying HOA fees an evictable offense for your renters. It's a pretty serious thing from your perspective as the property owner. You don't want to have to take on that liability if you're not making the actual payment.
Since HOA fees can change year-to-year, make sure to review and update this section each time you sign a new lease or renew a lease from a current tenant. It's also possible to add an addendum to a current lease if something should change related to the fee structure from your HOA.
What's the penalty for not paying?
The bylaws of your HOA will determine what happens if fees aren't paid, but the situation can get tricky if you've got a renter. If you've made the renter responsible for paying and they don't, you still face the consequences. This could mean anything from incurring late fees to dealing with a lien on your property.
To avoid this, no matter who's paying the HOA fees, you may want the payment to go through you. That way you can keep track of it. The easiest way to do this is to include HOA fees in your rent. Break down the annual cost and roll it up into the monthly rent you collect, but let your renter know this is happening. You don't want to leave them questioning why the rent is little on the high side without them understanding what it's covering.
Keeping it straight
HOA fees are one of the more confusing parts of landlord-tenant relationships. It's not always clear who pays HOA fees or the best way is to go about doing it. Since there's no right answer to the question, the best thing you can do is be clear about your expectations and put everything into the lease. It will prevent last-minute questions and hopefully ensure HOA fees are never late.