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Proper planning and open communication can help ease the pain of increasing monthly homeowners association dues.
It is the responsibility of your homeowners association’s board to set a budget each year, which includes the monthly income from homeowners, or association dues. While raising dues is never popular, it is a necessary step to properly maintain your community—and maintain the property values of those who are part of it.
So how do you raise your HOA’s dues without receiving backlash from homeowners? Follow these five steps:
- Determine a realistic increase. Take known and anticipated costs into consideration. You know your sidewalk needs repaving; you anticipate that energy costs will increase. Analyze how these costs will affect your operating budget and your reserves, and adjust the monthly dues accordingly.
- Inform homeowners of the expected increase. Send a letter to each homeowner explaining the increase. Include copies of the annual budget and any supporting documentation that explains the cost increase, such as year-over-year graphs of energy cost increases.
- Hold a special meeting with homeowners. Provide homeowners with an opportunity to ask questions and talk through the increase so they can understand why it’s necessary. Show bids for upcoming repair work (like that sidewalk project) and invite vendors to explain the cost of their services.
- Show how increased dues can help offset unforeseen expenses. Increasing dues may not be popular, but requiring a special assessment is even less so. Provide copies of your most recent reserve study to show the future needs of your community—and associated costs—and explain how increased dues will help prevent the need for a lump sum from homeowners later on.
- Offer payment plans for those in financial hardship. Offer to work with homeowners who are already struggling to pay their monthly dues through a delayed payment plan or some other method that works for both the HOA and the homeowner.
No matter how hard your board tries, not all homeowners will be happy with an increase to their monthly dues. However, taking a proactive, open and transparent approach will at least gain their understanding and acceptance.
This article contains general information. Individual financial situations are unique.
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