Differences Between a Condo Fee & an HOA Fee

Whether you live in a condominium unit or a neighborhood with a homeowners association, or HOA, that takes care of neighborhood upkeep, you’re going to see a recurring bill to cover condo fees or HOA membership. In many ways, these fees are essentially the same and help fund the maintenance and upkeep of property for which the association acts as a steward. While largely the same, these fees may be used differently, depending upon the type of association.

The biggest difference between a condo association and an HOA is the scope of ownership. In a condo, each member individually owns his unit but maintains a joint ownership in the building and its grounds. Ties to a homeowners association aren’t as tight: Homeowners individually own their lots and homes, and the HOA owns common areas.

Homeowners have no vested interest in common areas owned by the HOA. Because of this, condo fees are typically paid to support the upkeep of one’s own property, while HOA fees support another’s holdings.

A condo association or HOA’s fees and dues may vary significantly as they are based upon the holdings each needs to support. Because a condo association’s fees handle repair and upkeep of the condo building and common areas such as pools, parking lots and other areas, they’re typically higher than the fees assessed by a similarly-sized HOA. Individual homeowners bear the costs of maintaining their own homes – a cost that’s rolled into condo fees – so an HOA usually doesn’t require the level of funding that a condo association does.

In most HOAs, fees are assessed uniformly, with each lot owner paying an equal share of upkeep for common areas. In areas with different types of homes, such as one with single-family houses and townhomes, assessments may not be split by household. Instead, townhome owners pay an assessment proportionate to their share in their communal lot, and owners of single-family homes pay a full assessment.

A condo unit’s assessment system isn’t so clear-cut. Condo owners often have different percentages of ownership interest in the building, with larger units bearing a larger share of ownership. The association’s costs aren’t split evenly among each owner but paid in proportion to ownership percentages.

Many condo and HOA bylaws provide the association with the power to levy fines against members, though associations use fees and fines for different purposes. An association uses fees to cover maintenance and upkeep on its holdings. Fines are used as a punitive measure to encourage all residents to play by the rules in the association’s bylaws. Because they’re not a stable revenue stream, fines aren’t typically used to pay for routine upkeep.