HOA Fees:
What They Cover and When to Push Back

Unless you live in a full-service condominium, the HOA does not cover interior repairs. That means your plumbing, electrical, drywall, floors, cabinets, and appliances are your responsibility. In a condo, the HOA typically covers everything from the studs out, but you are responsible for everything inside. Check your governing documents for the exact boundary.

Your personal belongings, including furniture, electronics, and clothing, are not covered by the HOA master insurance policy. You need your own homeowners insurance to cover your personal property. The master policy only covers the structure and common areas.

If you upgrade your kitchen, install new flooring, or add built-in shelves, the HOA is not responsible for maintaining or insuring those improvements. They are your responsibility. In a condo, if you make interior improvements, they become part of the unit but are still your coverage responsibility under your individual insurance policy.

The three most important financial documents are the annual budget, the income statement (profit and loss), and the balance sheet. The annual budget shows what the board expects to spend for the coming year. The income statement shows what was actually spent versus the budget. The balance sheet shows the association assets and liabilities, including reserve funds. If the board refuses to provide these documents upon request, that is a red flag.

A reserve fund study is a long-term plan for major capital replacements like roof replacement, road repaving, and siding replacement. A well-managed HOA has a reserve fund study that identifies when these major expenses are due and whether the association is setting aside enough money to cover them. If the HOA is not adequately funding its reserves, you may face a special assessment or a large fee increase down the road.

Look for large or unexplained increases in any expense category, particularly landscaping and management fees. Compare the HOA budget to similar communities in your area. If fees are significantly higher without a clear reason, it may be time to ask questions. Also look for repeated budget variances, where actual expenses consistently exceed budgeted amounts. This indicates poor planning or financial mismanagement.

The best way to tell if your HOA fees are reasonable is to compare them to similar communities in your area. If you live in a townhome community with a pool and clubhouse, compare to other townhome communities with similar amenities. If your fees are 20 to 30 percent higher than comparable communities, there may be a problem. Consider factors like the age of the community (older communities often have higher maintenance costs), the level of amenities, and whether the community is self-managed or uses a professional management company.

If you believe fees are too high, start by asking informed questions. Why did fees increase this year? What is the largest expense in the budget? How does our reserve funding compare to the reserve study recommendations? Are there any pending special assessments? How does our management fee compare to industry standards? Boards that are transparent and responsive will welcome these questions. Boards that are defensive or evasive may have something to hide.

You have the right to inspect and copy the HOA's books and records, including financial statements, meeting minutes, and contracts. The association must make these available within a reasonable time after your request. If the board refuses, they are violating your rights under New Jersey law. Start with a written request. If they do not respond, you can escalate to an attorney.

Board meetings must be open to all members, and you have the right to speak during the designated homeowner comment period. The board must provide advance notice of meetings and make meeting minutes available. If your board holds meetings without notice or excludes members, they are not following proper procedure.

The HOA must apply its rules consistently and fairly. If you believe the board is targeting you or applying rules selectively, you have grounds for a complaint. Document everything, including dates, times, and communications. New Jersey courts have ruled that HOAs must act in good faith and treat all members equally.