Are you debating a new home or condo, but can’t get over the homeowner’s association dues? Well I’m here to tell you that higher dues could actually work in your favor later on. Here’s a few things you may not have known about HOA’s:

  1. Reserve Funds – HOA’s maintain reserve funds in order to prepare for large or unexpected expenses like a water leak or equipment breakdown. In the state of Minnesota, HOA’s are required to complete a reserve study every three years to determine the amount they should keep in the reserve fund. These studies estimate future costs and timing of repairs and replacements over a 30 year period.

  1. Higher Dues or Special Assessments – If reserve funds are not adequately maintained, it is likely that homeowners will experience a drastic hike in dues or special assessments when unexpected repairs are needed. If you notice that an HOA has very low dues, it is possible you will run into this type of situation.

  1. Selling Point – Underfunded reserve funds result in inadequate maintenance, declining property values and possible special assessments. Buyers tend to steer clear of communities with funding issues, penalizing the innocent homeowner. Paying higher dues to ensure a healthy reserve fund is in the homeowner’s best interest as far as resale and property values.

  1. New vs. Old – Older buildings often have higher HOA dues because more maintenance is needed. In addition, 30 year reserve studies have only recently been required, so in the past many HOA’s failed to properly prepare for future costs and found themselves underfunded, resulting in due hikes. On the flip side, newer communities have had more appropriate reserve funds from the beginning because they are planning for repairs 30 years out. In the end, HOA dues have gone up across the board, but they have also been more consistent due to recent regulations. Fewer surprises are a good thing when it comes to your wallet.


When you are considering a home that is part of an HOA, be sure to ask for their 30 year reserve study. Be leery of suspiciously low HOA dues because they could be hiding special assessments or a dues hike could be right around the corner. In the end, always do as much research as possible and weigh the pros and cons before ultimately deciding on your new home.



*The contents of this post are intended to convey general information only and not to provide legal advice or opinions.