Q. What are maintenance fees?
A. Technically, maintenance fees are another term for HOA dues. However, we use it as a term to describe the monthly or yearly assessments we pay. Assessments consist of HOA dues, reserve fund, property taxes, and Wyndham program fee. They almost always increase every year. In some rare instances, they may stay the same or go down. Let’s examine each component of our assessment fees.
HOA Dues – This part of your maintenance fees are set by the HOA of each resort every year. It goes to pay resort maintenance, which includes the buildings, parking lots/garages, playground, mini-golf, barbeque areas, common grounds, landscaping, etc. It also goes to pay for staff salaries, insurance premiums, snow and trash removal, and other services — the costs of the workforce to staff the resort and do maintenance increase every year. There are many factors that can cause the HOA dues to increase. The board puts out a proposed budget every year and votes on it. You must look at the budget every year, so you know how much it’s going up and why. It’s important to note that HOA dues are not used to do remodeling or other projects that are not done annually.
Reserve fund – The reserve fund pays for remodeling and upgrades that are not done each year/annually. It also covers insurance deductibles in the event of a natural disaster such as hurricanes, earthquakes, fire, etc. The reserve fund is why most do not see a special assessment after a hurricane damages a resort. The HOA determines how much each owner pays to the reserve fund. On rare occasions, you will see the reserve fund cost go down.
Special assessments – It is very rare to see a special assessment. These fees are to pay for unexpected costs. Before there was a reserve fund, owners would be charged a special assessment when there was damage that was costly to repair, such as damage from a fire or hurricane. In some cases, owners would be charged a special assessment when remodeling or refurbishment had to be done. These days, between insurance and reserve funds, it’s unlikely you’ll see a special assessment. Not every resort has a reserve fund, but most do. Be sure to check your yearly assessment invoice to see if your resort has a reserve fund.
Taxes – This is self-explanatory. These are usually property taxes, but some localities charge special taxes on resorts. The taxes that you pay in your assessments cover all that.
Wyndham program fee – This is the fee that pays for Wyndham’s operating expenses. The vacation planners who answer the phone, the reservation system, the website, insurance, taxes, and any other operating costs that the exchange program incurs. It also pays for those housekeeping credits that you get every year to pay for cleaning your room. This fee does not always go up every year. Wyndham does not profit from these fees. If you look at their budgets every year, you will see that their profits mostly come from sales and rental revenue.
It is important to note that not all resort systems handle assessments in the same way that Wyndham resorts do. Non-Wyndham resorts with fixed weeks may have different guidelines. Maybe they don’t charge a reserve fund, or maybe they charge a little extra, so they don’t have to increase the fees every year. Maybe owners pay for housekeeping separately. So, you may own a fixed week at a resort that has not seen an increase in three years. That’s because their costs remained roughly the same or they may have overcharged in the previous years.
Now that you know what your monthly fees consist of, hopefully, it will give you a better understanding of what you are paying for and why they increase. As you add more points, the maintenance fees you pay will increase. If you own more of the property, you have to pay for your share of the maintenance costs and taxes. Resorts like Canterbury and National harbor have lower fees because they have less real estate and don’t own garages that cost money to maintain. They also have a hotel side that helps supplement the costs of maintenance. You may even notice that the low maintenance fee resorts often cost more points. That’s because when they were built, they divided it up differently than the older resorts. So, the more points that it’s divided into, the lower the maintenance fee rate. A look at the Wyndham directory will tell you which resorts cost more in points.