HOA Management Fees: What They Cover

When a board compares management proposals, the fee is the first number everyone looks at, and the hardest one to compare. Two proposals with similar fees can cover very different work. This guide explains what a management fee usually pays for, what tends to be billed on top, and how to make sure you are comparing the same thing. It contains no prices: fees depend on the community, and a fair comparison starts with the scope, not the number.

A note on terms: owners often say “HOA fees” when they mean their assessments or dues. The management fee is different. It is what the association pays its management company, and it is one line in the association’s budget, paid out of the assessments owners pay along with insurance, utilities, maintenance and reserves.

What a base management fee covers

The base fee is the fixed, recurring charge for the core work of running the association. Most base fees include some version of the following:

• A community manager assigned to your association, who prepares for and attends board meetings and the annual owners’ meeting, and carries out what the board decides.
• Accounting: collecting assessments, paying the association’s bills, bank reconciliations, and a monthly financial package for the board.
• Budget preparation: a draft annual budget for the board to review, including the contribution to reserves.
• Collections: reminders and statements to owners who fall behind, following the association’s collection policy.
• Vendor oversight: getting bids, coordinating routine contractors such as landscaping, snow removal and cleaning, and checking that the work gets done.
• Owner communication: answering owner questions, sending notices and newsletters, and keeping owner contact records.
• Records and compliance: keeping the association’s records, sending the annual disclosure, and keeping the state registration current.
• An online portal where owners pay and send requests and board members review financials.

The details vary. One company’s base fee may include a set number of board meetings a year, for example, while another charges for every meeting. That is why the scope matters more than the headline number.

What is often billed separately

Work that varies a lot from community to community, or that only some associations need, is often charged on top of the base fee. Common examples:

• Maintenance labor and materials. If the management company has its own maintenance crews, their time and materials are usually billed by the job or by the hour. If it doesn’t, the association pays outside vendors directly.
• Capital project management. Overseeing a roof replacement, repaving or another large reserve project is often a separate fee, sometimes tied to the size of the project.
• Resale documents. When an owner sells, the buyer’s side needs a status letter and the association’s documents. These are commonly charged to the selling owner or the buyer rather than to the association.
• Extra meetings, such as special meetings, committee meetings or meetings beyond the number the base fee includes.
• Collections beyond the routine: work on accounts that have been sent to an attorney or a collection agency.
• Insurance claims and major repairs after a loss.

None of these extra charges is a red flag on its own. A good proposal lists them in plain words so the board can estimate what the association will actually spend in a year.

How fees are usually structured

Management fees are usually quoted in one of two ways:

• Per door (per unit). The fee is a set amount for each unit, so it grows with the size of the community.
• A flat monthly fee for the whole association, set from the community’s size, complexity and the services included.

Either way, the price usually reflects more than the unit count. A community with large common areas, aging buildings, amenities such as a pool or clubhouse, lots of owner turnover, or a long list of rules to enforce takes more management time than a simple community of the same size. Mountain properties add their own work: snow and ice, short building seasons and owners who live elsewhere much of the year.

Ask how and when the fee can change, too. Look for an annual adjustment clause and what happens to the fee if the scope changes.

Comparing proposals: questions to ask

Give every company the same list of questions so the answers line up:

• What exactly is in the base fee? Ask for a written list of the services included.
• What is billed separately, and how? Hourly, per job, per document or at cost.
• How many board meetings are included each year? What does an additional meeting cost?
• Who will be our community manager, and how many other associations does that person manage?
• When do monthly financials arrive, and what is in them?
• How are maintenance requests handled, and who does the work?
• What do resale documents cost, and who pays for them?
• Are there setup, transition or termination fees?
• How long is the contract, and how can either side end it? Our guide to changing HOA management companies covers what to look for.

Put the answers side by side and estimate a typical year’s total cost for each proposal, not just the base fee. The cheapest base fee is not always the least expensive year once the extra charges are added.

At Mountain Valley, our financial management team sends boards a full financial package by the 20th of each month, and our in-house maintenance crews handle much of the day-to-day work. See our HOA management page for how we work with boards, or ask for a free assessment of your community below.