What is a Homeowners Association (HOA)?
An HOA (short for “homeowners association”) is the group that runs a residential community, setting rules and collecting dues to cover its costs.
HOAs are found in many townhouse developments, condo complexes and planned communities. If you’re buying a home, find out whether there’s an HOA — meaning you’ll have HOA fees to pay, but also maybe some benefits.
Key takeaways
- The HOA sets and enforces rules, like whether you can rent out your unit or how many people can live in it.
- It also charges HOA dues and can fine residents for rule violations.
- HOA fees usually run $200 to $300 a month, depending on the community’s location and amenities.
How does an HOA work?
Usually, you have to join the HOA if you buy a home in an HOA community. As a member, you’re required to follow the community’s rules and pay HOA fees, which are separate from your mortgage payment.
The HOA uses the fees to manage and maintain the community, including upkeep of common areas and amenities like a pool or gym.
HOAs are managed by a board of directors, who are usually elected residents from within the community. The duties and powers of an HOA are detailed in its governing documents, including the Covenants, Conditions and Restrictions (CC&Rs) and bylaws.
Examples of HOA rules
As a resident in an HOA neighborhood, you’re required to follow certain rules, which vary by community. Common HOA rules include:
- Maintenance guidelines: Some HOAs have rules for property maintenance, including requirements for lawn care and the exterior of your home.
- Pet limitations: An HOA might limit the number or type of pets residents can have. Some HOAs will ban specific dog breeds.
- Common area rules: If your community has shared spaces, like a pool, grilling area or gym, the HOA usually sets and enforces rules for usage, such as operating hours and guest policies.
- Noise regulations: Some HOAs have policies to control noise levels, including set quiet hours.
- Occupancy limits: HOAs may limit the number of people who can live in a property to prevent overcrowding.
- Rental restrictions: Many HOAs have restrictions on using your home as a rental property, especially as a short-term rental.
What are HOA fees and what do they cover?
How much you pay in HOA fees or HOA dues will depend on different factors, like your location and what amenities your community has. Generally, the more services, the higher the fees.
The average HOA fees in the U.S. are around $200 to $300 a month, though they can run much higher in some luxury communities. The fees are usually collected on a monthly or quarterly basis.
Your HOA fees may cover the following:
- Maintenance and utilities in common areas
- Amenities
- Landscaping
- Trash and recycling
- Security
Besides paying for day-to-day operations, part of the HOA fees go into a reserve fund for long-term projects and unexpected repairs. If the HOA doesn’t have enough reserve funds for a project — say, repaving a parking lot — then a special assessment may be charged to all homeowners.
HOA fees are paid directly to the association (not your mortgage lender), and they can change over time. HOA dues are not tax-deductible.
What legal powers do HOAs have?
If you break the HOA rules or don’t pay your dues, you could face legal and financial penalties.
HOAs may issue warnings and fines for violations. If you don’t pay these fines, the HOA could put a lien on your home. The HOA could also be able to sue you to collect its money.
HOA board of directors vs. HOA management company
An HOA community usually has an elected board of volunteer residents to set rules and policies. Many HOAs also hire an HOA management company to run the community’s day-to-day operations. The management company handles things like maintenance requests, sending reminders about community rules or late HOA fees.
Is an HOA right for you?
Whether HOA living is right for you will depend on your lifestyle, goals and how you feel about certain restrictions.
Here are some questions you’ll want to answer about any HOA community you’re considering:
- How much are the HOA fees?
- When are the HOA fees due? (monthly, annually, etc.)
- What do the HOA fees cover?
- How often do the HOA fees increase?
- What are the community rules and regulations?
- How is the HOA managed, and who makes the decisions?
- What is the HOA’s financial health?
- What amenities are offered?
- What services are provided?
- Are there any upcoming special assessments?
Personal testimony: What to look out for in an HOA
If you’re considering buying a home with an HOA fee attached, be sure to investigate which services and amenities are included in that fee, in addition to considering how the fee will impact your bottom line. It’s easy to get turned off by a high fee, but if a lot is included in that fee, it could be worth the added cost. For example, my condo fee is slightly higher than most other associations in the area, but it includes all my utilities, which the other fees don’t. To me, it’s worth paying a little bit more on a monthly basis to have the security of only needing to worry about making one fixed payment, regardless of my utility usage.
– Tara Mastroeni, HOA community resident
HOA pros and cons
| Pros | Cons |
|---|---|
Good for property value: An HOA community usually has rules to keep it looking attractive, such as landscaping and outside appearance requirements. This can help keep property values strong. Access to amenities: Many homeowner associations include access to playgrounds, walking trails, fitness centers and swimming pools for residents. Services included: Depending on the HOA community, services like trash collection, snow removal and common area maintenance may be covered. Some HOA fees even include utilities. Help dealing with neighbors: A homeowners association can reduce conflict between neighbors by setting rules like noise and pet regulations. | HOA fees/HOA dues: HOA fees or dues add to the cost of a home, and often rise over time to pay for maintenance and projects. Rules you might not like: HOA rules can range from pet restrictions to the color you paint your house. Some HOAs strictly enforce rules, while others are more lax. Paying extra for special assessments: If a major project or repair is required and the HOA lacks the funds for it, homeowners can be forced to pay a special assessment. Losing your home over unpaid dues: An HOA can place a lien on your home or even initiate a foreclosure for unpaid HOA fees and assessments. |