Low HOA Dues Are Not the Bargain They Appear to Be

When comparing two similar condos in competing HOA communities, the one with lower monthly dues looks like the better deal. The opposite is often true: artificially low dues are one of the clearest warning signs that a community is headed for a special assessment.

Joe Braun, co-founder and CEO of Solume, an Atlanta-based platform that helps self-managed HOA and condo boards with reserve planning and financial forecasting, says the pattern is consistent. Boards resist raising dues because they do not want the backlash. Meanwhile, the cost of maintaining shared property – roofs, pools, parking structures, entry gates – keeps climbing. The gap between what the community collects and what it will eventually need to spend widens year after year, until the bill arrives all at once.

The Psychology Behind Stagnant Dues

The core problem, according to Braun, is human rather than financial. Board members are volunteers who live in the community and see their neighbors at the mailbox. Raising dues by a meaningful amount feels like picking a fight. “I don’t want to be the bad guy,” is how Braun describes the typical board member’s mindset.

So dues stay flat – sometimes for years. As Braun puts it, that math stops working when the cost of everything else has risen. If groceries, insurance, and contractor labor have all gotten more expensive, but the community’s monthly collections have not budged, the reserve fund falls further behind every month.

The result is a special assessment – a one-time bill charged to every owner to cover a repair or replacement the reserves cannot pay for. Braun says he has seen communities where owners were “being hit with 13 or $15,000 special assessments that are coming out of the blue” despite having been professionally managed for decades. The underfunding had been building for years, but because no one raised dues incrementally, the full cost landed all at once.

What Buyers Should Actually Look For

This reframes how buyers should evaluate HOA dues during a home search. A community charging noticeably less than comparable neighborhoods is not necessarily well-run – it may be deferring costs. The question to ask is not how low the dues are, but how funded the reserves are.

A reserve study, if the community has one, shows the funding percentage – the ratio of what the community has saved to what it should have saved based on the projected replacement costs of its shared assets. A community with low dues and a low funding percentage is almost certainly headed for either a significant dues increase or a special assessment. Both affect cost of ownership, and neither shows up in the listing price.

Braun uses a blunt analogy for what happens when reserves run dry: “If you don’t have the money, when your roof starts to collapse, you’re throwing it on the credit card.” For a community association, the equivalent is a special assessment or a loan repaid through elevated dues over several years. The cost does not disappear – it arrives later and lands harder.

The Seller’s Blind Spot

Sellers in communities with stagnant dues face a less obvious risk. If the community has been holding dues flat for years and the reserves are thin, buyers and their lenders will notice. Braun says mortgage backers including Freddie Mac and Fannie Mae are becoming more strict about reserve requirements. Even when a borrower can afford the loan individually, a lender may flag a poorly funded community as a bad investment – complicating or blocking the sale.

Even if the sale closes, a knowledgeable buyer will factor the likelihood of a future special assessment into the offer. The seller effectively absorbs years of deferred dues increases in the form of a lower sale price. The savings the board thought it was delivering by holding dues down can reduce property values instead.

Well-managed communities do keep costs reasonable by planning ahead, maintaining assets on schedule, and adjusting dues gradually. The distinction is between dues that are low because the community is efficient and dues that are low because the community is avoiding a hard conversation.

Braun considers this the most common financial mistake self-managed boards make. “Keeping dues artificially low to keep people happy is a problem,” he says. For buyers, the practical step is to request the reserve study, check the funding percentage, and look at the dues increase history over the past several years. Flat dues in a rising-cost environment is a data point – and not a reassuring one.