The Mysterious HOA Fee Explained

Some Edmonton communities like Terwillegar Towne, Summerside and Windermere have "home owner association" fees. An HOA fee is usually a very small fee, usually around $100 - $200 per year but it can be more depending on what is all covered. The fee usually pays for maintaining extra things that the developer put in the subdivision that are over and above what the city of Edmonton required the developer to do. This is usually done to make the development more attractive to home buyers, but it's not stuff the city of Edmonton is willing to pay to maintain. HOA fees may include maintenance of fountains, trails, recreation facilities, a community centre and so much more.

summerside
Summerside, Edmonton (photo from Edmonton Journal)

These associations or the agreements governing them are usually registered on title by way of a restrictive covenant. Some HOA’s are proactive socially and do lots of community events, while some are just doing the minimum to maintain what they are obligated to maintain. 

Recently one of our clients was contemplating not buying a home they liked because it had HOA fees, while some of the other properties listed for sale in the area didn’t have any HOA fees listed on the MLS® feature sheet. Our client wondered why some owners in an area have to pay fees and some don’t - they didn’t want to pay an HOA fee when their neighbours weren’t. In reality, everyone in the subdivision pays the fee, it just wasn't included on the information sheets for some of the properties. One more reason to make sure you see the title for a property before making an offer.

About 

Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.

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8 Responses to “The Mysterious HOA Fee Explained”

  1. wsnNo Gravatar 26. Mar, 2012 at 11:52 am #

    Where I live, I need to pay $600/year in HOA. Some of the larger lots need to pay up to $1080/year. I actually see the fee as a plus, together with the required stucco exterior, it serves as a filter. Those who want to spend a little extra for better curb appeal move in, while those who are a bit too thrifty please don’t come.

  2. birdladyNo Gravatar 26. Mar, 2012 at 2:26 pm #

    Another thing I have noticed is the # of condo’s that are being sold as freehold, no condo fees. As I can see where this gives the appearance of the units being more affordable for estimating monthly costs, I cringe at the thought of what will happen when major exterior improvements are needed and all owners have to chip in for those. Roof replacements, driveways, etc. can really have a huge cost attached. Might not impact the people buying now and selling before this happens, but I would be really cautious buying an older unit.

    I also wonder how common property insurance and landscaping is handled. I would assume these units have HOA fees attached – at least I would hope so.

  3. NathanNo Gravatar 27. Mar, 2012 at 10:04 am #

    The HOA fee can be considered a sort of privately managed tax. When a developer builds, he has to put in a minimum amount of infrastructure, bonded to the city for a period of time. During that period the developer has to pay for all maintenance of that infrastructure. And the end of that, the city (or Epcor in the case of water) takes ownership of it, and it is maintained by your taxes and Epcor bill. The city returns the bond to the developer.

    A developer may decide to retain ownership of the infrastructure in perpetuity, and build better infrastructure and forgoing the bond to the City. This sometimes makes sense to developers that will be building out an area slowly, meaning it will be years before they can turn it over to the city. The developer can choose to either lump the projected future maintenance costs into the sale prices, or they can include the HOA fee into the title. They may do both in the same subdivision.

    Because the developer, and the HOA are money driven, it is probably possible to buy out any HOA covenant on the title. It won’t be cheap, but it’s a pay now, or pay in installments decision.

    • Sara MacLennanNo Gravatar 28. Mar, 2012 at 11:04 am #

      Ummmmm….sort of… except for the part about buying out the HOA fee.

      • NathanNo Gravatar 29. Mar, 2012 at 10:02 am #

        You’re right. Although in theory it should be possible.

  4. NataNo Gravatar 30. Mar, 2012 at 6:16 pm #

    Though I am not objecting HOA fees in general, I do object HOA in many cases. Not sure how it goes here in Edmonton, but in US I knew many gated communities with HOA which was regulating everything including even color of blinds, not speaking about exterior. When I buy a house, I want to have it as I want it, not being one the same of a hundred.

    • Sheldon JohnstonNo Gravatar 31. Mar, 2012 at 9:14 am #

      I agree to a certain extent but if people are free to do exactly what they want you end up with Cairo. I don’t want to live next to the person who paints their home pepto pink. You probably have commons sense but there is always that one person who builds or maybe they don’t exactly finish building like Con Bolands house in Riverdale.

    • Sheldon JohnstonNo Gravatar 31. Mar, 2012 at 9:16 am #

      I forgot to mention just because there are Restrictive covenants or architectural guidelines that doesn’t mean there is an HOA or HOA fees are applicable.