When governments run short on cash, they get creative. Rather than face the wrath of the citizens by overtly raising taxes, they add a fee here and assess a fine there. Pretty soon they've collected enough money to make up their budget shortfall.

Can your association take the same approach to raising cash by adopting fees that will fill your association's coffers? Move-in and move-out fees for renters, combined with a fee for guests who use your pool, added to a fee for residents who park in restricted areas can add up to real revenue.

"Boards are absolutely asking me more questions about this issue," says Penny L. Koepke, an attorney at Ekmark & Ekmark LLC in Scottsdale, Ariz., who represents homeowners associations. "In this economy, they're trying to figure out ways to make ends meet. They're asking for suggestions and asking about specific fees, 'Is this OK for us to do?'"

Here, we discuss the pros and cons of a fee-based revenue plan.

For California HOAs, That's a No-No (Mostly)

Before assessing any fee, understand that your governing documents or state law may prohibit you from taking a fee-based approach to raising revenue. "In California, we have a pretty tight regulatory scheme," explains David C. Swedelson, principal at Swedelson & Gottlieb, a law firm that represents associations in the Los Angeles area. "California law prohibits associations from charging a fee not directly related to a cost. You budget for expenses. If you don't have enough money, you increase assessments or do a special assessment. Associations can't make a fee a profit generator. Fees have to be tied to actual costs."

Examples: "You can't charge homeowners a fee for guests to use the pool," says Swedelson. "What's the cost to the association? My bringing a guest to the pool doesn't cost the association any more money than if I don't bring a guest. Or if associations charge $500 for the use of a recreation center, why $500?"

However, there is a slight gray area. "Move-in and move-out fees are challenged all the time," says Swedelson. "There's no way it costs the association $150 to handle a move in or out, but associations can justify the cost by saying a portion of the fee goes to reserves for the wear and tear on the common area from moves."

California associations are also permitted to rent their facilities to outsiders for a fee. "I know of an association that generates substantial money from its clubhouse on the beach," says Swedelson. "It charges nonmembers for use of the facility for filming and makes a fortune on weddings and parties."

Fees You Can Believe In

Other states, however, have no statutory restrictions on associations' use of fees, which leaves the issue to be determined by governing documents. Typically, the big question is whether you're attempting to charge a fee for something that homeowners have already paid to access.

"If an association has a number of amenities that are part of the governing documents, those are for the use of all association members, not one or two," says Duane McPherson, division president at RealManage, a San Rafael, Calif., association management firm that oversees properties in Arizona, California, Colorado, Florida, Louisiana, Nevada, and Texas. "If you start charging for things that came with the property, you've got to be careful. In some cases, you can defray some costs by charging fees, but the majority of amenities are tied to the property permanently, and you can't get too carried away with what you charge for them."

Florida treats the issue differently for condos and homeowners associations. "In Florida, there are a few areas where condos can raise revenue," says Bob Tankel, principal at Robert L. Tankel PA in Dunedin, Fla., a law firm that specializes in advising associations. "If the documents provide for it, they can levy a late fee on assessments. They can also charge up to $100 per person as a transfer fee for leases and sales. They can rent the common elements, like parking spaces that haven't been assigned. They can put meters on lights at the tennis courts so you have to pump quarters in. But those fees have to be documentarily allowed. Other than those, it's very difficult to find areas where a condo association can raise money other than through the assessment process."

Homeowners associations aren't as tightly regulated under Florida law. "With HOAs, there's probably a little more latitude," says Tankel. "But any way of raising revenue in the noncondo area would be best if put in the documents. An association may be able to rent out the clubhouse or charge a fee for the use of something that's already there. But if that fee is challenged, the judge or jury is going to look at whether the fee is something the commando board imposed or something the owners agreed to."

In Arizona, associations are searching for ever more ways to add revenue through fees, and the question again is subject to the association's governing documents. "Is it OK to charge tenants a registration fee for owners to register their tenants with the association?" asks Koepke. "Whether that's allowable depends on your governing documents. And though it might be a creative way to get money, it might be hard to enforce. How will associations know tenants are there?"

Koepke says most Arizona governing documents allow associations to charge all owners admission fees for the use of common elements, even if they've been free in the past. "It's a pretty standard provision, allowing the association to charge fees or admission charges to use the common elements," she says. "A lot of times associations don't because they haven't needed to. But in this economy, they're tying to generate as much revenue as they can."

As a result, associations are considering adding locks to pool gates and charging a $25 key charge to help defray the cost of running the pools. Or while they may have rented the clubhouse out for a nominal amount and charged a refundable deposit, now they're charging nonrefundable deposits.

If You Can, Should You?

The fact that you can charge a fee doesn't mean you should. "For most communities, these fees aren't material," says Tankel. "I'd rather have them get more aggressive on delinquent payments than have them nickel and dime people on stuff they're presumably already paying for."

McPherson agrees. "I'm not sure that's the best approach to take," he says. "When you do a sweeping change for what you charge and don't charge for, you need to be extremely careful and really evaluate changes prior to implementation. Otherwise, residents who are paying those fees end up covering for those who are struggling and can't pay their assessments. I'd rather have associations reduce expenses as much as possible and try to ride out the storm. We're going to recover. We just don't know when."