How Are HOA Fees Set and How Often Can They Increase?

HOA fees start with an annual budget: the board estimates the coming year's costs, adds a reserve contribution, and divides the total among homeowners. In most communities, each owner pays an equal share, though some documents allocate by lot size or unit type. The result becomes the fee you pay in monthly, quarterly, or annual installments.

The budget is not a guess approved in secret. In most Pennsylvania communities the budget is prepared by the board or manager, reviewed, and presented to owners, with the declaration defining what requires a vote and what the board can decide on its own.

Fee levels track the community's real costs, and the biggest drivers are the ones you cannot easily control:

• Insurance: community property and liability premiums have been a major and growing cost for many associations.
• Labor and contracts: landscaping, snow removal, trash, pool, and management contracts rise with wages and fuel.
• Utilities: irrigation, community lighting, and amenity utilities.
• Reserve funding: the more disciplined the community, the more it sets aside now to avoid special assessments later.
• Amenities: pools, clubhouses, and fitness rooms must be staffed, insured, and maintained.

Communities that keep fees artificially low for years typically catch up through bigger increases or special assessments, so low is not automatically good.

There is no Pennsylvania law that caps HOA increases; the rules live in each community's declaration and bylaws. Many communities allow an increase every year as part of the normal budget process, limited by a stated maximum percentage or by an owner vote for larger jumps. Others require a membership vote for any increase above a threshold.

When you review the documents, look for three clauses: how the budget is adopted, whether increases beyond a certain percentage need a vote, and what the community has actually done in recent years. The recorded behavior of a specific community is a better predictor than the general rules, because some communities raise fees annually and others hold the line for years and then jump.

Ask the seller or the association for the past several years of dues history and the most recent budget. Three questions cover the ground:

• What has the fee done each year for the past five years, and why?
• What major expenses are coming, and are they covered by reserves or planned as increases?
• Is the budget balanced this year, and what is the delinquency rate?

With those answers you can budget your monthly cost on the trajectory the community is actually on, instead of being surprised in your second year of ownership.

Once you have the budget in hand, a quick reading exposes how the community manages its money. Start with the total collected versus the total spent, and check whether the community is living within its means or tapping reserves to pay operating bills, which is a common hidden stress.

The lines worth a second look

Compare the insurance line to the previous year, since insurance has been a major mover for many associations and a large jump today usually means a larger jump tomorrow. Look at the management contract, because management fees that grow faster than inflation deserve a question. And check the reserve contribution line: if it is a token amount on a community with aging pavement and roofs, the budget is telling you the real costs are coming later.

How owners compare communities

When you compare two communities, compare the same lines: what the fee includes, what the reserves hold, and what the history of increases has been. Two communities with the same fee can have very different trajectories, and the trajectory, not the fee, is what you will live with.