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Key takeaways

  • HOA is short for homeowners association, an organization that governs a housing community and sets rules for its residents.
  • HOAs collect fees that cover the cost of amenities and services provided, such as landscaping or a community swimming pool.
  • Rules set by an HOA are meant to keep the neighborhood a nice place to live, but many people find them overly restrictive.

The term HOA is an abbreviation for homeowners association. A community that’s governed by an HOA can consist of individual houses, townhouses, high-rises or condos, often within a planned community. The responsibilities of the HOA can vary based on property type — for a condo development it may oversee management of the entire property, for instance, whereas for a townhouse community, it may only be in charge of common areas.

What is an HOA?

An HOA, or homeowners association, is a self-governing organization in “common-interest” communities where homeowners collectively pay fees to maintain the units or neighborhood. HOAs are typically run by resident homeowners, unpaid volunteers who are elected to a board of directors that oversees the HOA’s management.

Properties within an HOA are governed by a collective set of rules and bylaws that are enforced by the association. Each property owner is required to pay HOA fees that cover use and maintenance of common areas. These areas can include swimming pools, fitness centers and parking facilities, as well as communal lawn maintenance, snow clearing (where applicable) and landscaping.

If you are thinking about living in an HOA community, there will be fees to pay and rules to follow. Here’s everything you need to know about HOA life.

How do HOAs work?

An HOA is more than just a set of rules and regulations. It serves as a collective body that oversees the management and maintenance of a neighborhood or multi-unit building.

The HOA board of directors, usually made up of elected homeowner volunteers, is tasked with scheduling regular meetings, creating budgets, hiring vendors and, most importantly, enforcing the community’s rules and regulations. These rules are typically outlined in the Covenants, Conditions and Restrictions (often abbreviated to CC&Rs), which serves as the governing document for the association. Failure to follow the rules can have potentially severe consequences.

What power does it have to enforce rules?

Enforcing the rules of an HOA community is a significant responsibility of the board, and while all HOAs have rules, some are far more restrictive than others. For example, many will require you to get prior approval for home renovations, and others might prohibit you from renting out your home. Some HOAs may restrict the number of plants you can have in your front yard, the color you are allowed to paint your home’s exterior or the height of your mailbox.

If a resident breaks the rules, the potential consequences can be serious. The board might potentially impose penalties for non-compliance, including fines, suspended privileges and even possible legal action. A homeowner can potentially have a lien put on their home for repeatedly failing to comply with rules or falling behind on HOA payments. In the most extreme cases, the HOA may even have the right to initiate foreclosure proceedings.

However, the extent of an HOA’s powers depends on state laws and the specific language in the CC&Rs. It’s crucial that these rules are enforced consistently and fairly to avoid any perception of bias. While HOAs have the power to enforce these rules within their community, they are also bound by local and federal laws, including the Fair Housing Act, to ensure fair and equitable treatment of all residents.

How much are HOA fees, and what do they cover?

HOA fees can range a couple hundred dollars to $2,500 or more per year. The amount HOA homeowners must pay depends on the amenities offered by the community. Neighborhoods with extensive amenities or luxury facilities usually charge considerably more than those that just enforce rules and restrictions. HOA fees are crucial for maintaining shared areas within the community, and failure to make timely payments can significantly impact the HOA’s finances.

The basic obligations of an association, which its fees will cover, can include:

  • Landscaping
  • Maintenance (including pest control and garbage pickup)
  • Parking
  • Shared utilities (for example, in common areas)
  • Safety and security

From time to time, homeowners in an HOA may also need to pay special assessments. These charges are common when a storm, natural disaster or other unanticipated problem hits and the community requires unbudgeted repairs beyond what its reserve funds can cover. In this case, the HOA has the power to levy a special one-time fee to cover the costs.

Pros and cons of HOA life

Some homeowners love living in an HOA community. Others may find the rules to be too restrictive and cumbersome. Here’s a list of pros and cons to help you decide.

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  • Your neighborhood will be neat and well taken care of, with minimal effort on your end. Your property value will likely benefit from the rules governing the maintenance and appearance of homes, too.
  • You might have access to exclusive amenities like a swimming pool, playground, clubhouse or gym. You may also have opportunities to meet and socialize with your neighbors through HOA-sponsored events.
  • The HOA board can mediate disputes between neighbors for property-related issues that violate the rules (for example, barking dogs or fence disputes).
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  • HOAs typically have a lot of power over how you can maintain and live in your home. You might be limited to certain design schemes or paint colors, or even the number of and type of pets you are permitted to have.
  • HOA fees can stretch your monthly housing budget, especially if home prices are already steep in your area.
  • Some HOAs can be aggressive about sending violation notices for the slightest infractions, and prices can increase at the board’s discretion.

Questions to ask before buying in an HOA community

Buying a home in an HOA community involves more than just considering the home itself. It’s crucial to understand the workings of the HOA and what it means for you as a homeowner. Here are some common questions about HOA living — make sure you know the answers before buying, so you don’t run into any unpleasant surprises once you move in.

What amenities does it have?

The amenities offered by an HOA community can greatly enhance your quality of life. But remember, the more amenities, the higher your fees are likely to be. To fully understand what you’re paying for, find out exactly what’s included. For example, does the money cover trash pickup and landscaping of shared areas? Twenty-four hour security? A pool or fitness center? What rules or restrictions are in place for using those amenities? It’s also good to ask about whether the HOA has any new amenities in the works that may impact the amount you pay.

What are the rules and bylaws?

Understanding the rules and bylaws of the HOA is crucial, as these rules will govern your life in your new home. Before you make an offer on a home, take the time to read through the community’s CC&Rs to ensure you’re comfortable with them. They will outline everything from paint colors to pet policies.

How is the HOA run?

An efficiently run HOA can significantly enhance your living experience. Typically, HOAs are operated by a board consisting of volunteer homeowners who reside in the community. If the board has an upcoming meeting, see if you are permitted to attend to get a feel for how things are run. You may also want to do some internet sleuthing: Check online community groups to see if people have posted about their experience with the HOA. Some also have online reviews on Google Reviews or Yelp.

Keep in mind that serving on the HOA board isn’t a commitment many are willing to take on, so the same board members often continue to get reelected. This can create conflict if the board and newer residents disagree on an issue. How does the HOA handle disputes between members? Does the board mediate these issues, or are they handled through a third party?

Some HOAs are run by a real estate developer or property manager. Typically, the developer maintains control until a certain amount of units are sold. If the development is fairly new, find out whether a board has been established yet.

What is the HOA’s financial status?

The financial health of the HOA is critical, so be sure to ask for a copy of its financial statement. This can give you an idea of how well the HOA is managing its funds, how often dues are raised and by how much, and whether you might be faced with a special assessment in the near future.

Ask about the reserve fund, as well. This acts as a form of savings account, where the HOA sets aside a portion of the collected fees for future repairs and replacements of major community assets. Look to see if the HOA has a sufficient reserve fund and insurance to make repairs if, say, a hurricane blows off the clubhouse roof or flooding damages the landscaping.

Bottom line

Living in an HOA community comes with some trade-offs. On one hand, you get the benefit of a well-maintained neighborhood that might have more amenities than a community without an HOA. On the flip side, you’ll have the added monthly expenses, and you might not get as much leeway to maintain your home as you’d like. Weigh the pros and cons carefully, along with the costs, to determine whether it’s right for you.