Understanding Neighborhood Fees


There are a lot of things to keep track of and understand when you are getting ready to write an offer. While a buyer’s agent can absolutely help to make that process less stressful and offer great advice, it is still important to have a working knowledge of what you are getting into when it comes to costs and fees that may be associated with your potential new neighborhood. One of the things that can pop up and can be confusing is the different types of fees some neighborhoods can charge to new buyers. The main factor is if the neighborhood has a home owner’s association (HOA) or not. If so, there will likely be both one time and ongoing fees associated with living in this neighborhood.  Although it depends on how the contract is worded and the strategy you and your buyer’s agent are employing most often the one time closing fees are buyer’s costs.

First up, an estoppel fee. This fee is charged by the home owners organization to the title company or attorney’s office in order for them to determine the status of the seller’s HOA account. They will determine if the seller is current and on-track, are behind, or if there are any special assessments that are due by the seller.

Another common closing cost is a one-time capital contribution fee, sometimes called a transfer fee or initiation fee. This fee is collected by the home owners association as a way to pad their budget and put money into their reserves. These funds are often used for future capital improvements and repairs the common areas in the community.

Some higher end neighborhoods that have clubs or golf courses may require you to join them and pay a fee to do so as well as ongoing membership fees.  They may also have a specific community enrichment fee on top of the capital contribution.

Next up, the ongoing home owner related fees. This can be a bit confusing as some neighborhoods have
HOA dues and some have regime dues and they use this term interchangeably. These are the fees that pay for repairs, upkeep, and improvements in the neighborhood. Such as a pool both maintenance and insurance, green space, front entrance lighting to name a few.  Basically the money that funds the budget that the home owners vote on each year. Sometimes a large neighborhood can have both an HOA fee and a regime fee. This can happen when the neighborhood as a whole has a fee and then the subsection within that neighborhood has an additional fee that is for just that section. This most often happens when the subsection is made up of multifamily homes, such as condos or townhouses. These units have additional fees because when you live in a condo or townhouse most often it’s set up for all the owners to share the cost of certain elements that as a single family owner the individual is responsible for. For example, regime fees often include, pest control, a termite warranty, exterior insurance for the buildings, power washing once per year, flood insurance (if the units are in a flood zone) and a reserve to have money to replace the roof and exterior when it is time.

Your buyer’s agent can walk you through the different types of fees associated with the specific house you are interested in.

You may also download the PDF here.


Select any tab to view media
No items found.


Select any item to view and/or download
No items found.


Select any item below for more....

No items found.