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Buying your first home naturally comes with a lot of firsts. For the first time, you’ll be a regular presence at a nonstop stream of open houses, taking out a mortgage, closing on a home, owning a home and making repairs and decisions without a landlord’s help or rules.
While they don’t have a landlord, some homeowners do have to deal with a homeowners association (HOA). An HOA is a self-managed organization that oversees a planned community, setting rules and enforcing them.
For homes in certain neighborhoods, dealing with an HOA board is unavoidable – just as unavoidable as the policies and fees that come with it.
If the home that makes your heart beat faster is linked to a homeowners association, you’ll want to learn how the association is run, what protections it provides and what its policies are.
What Is a Homeowners Association?
A homeowners association is a volunteer, community-led organization that helps manage a neighborhood or community. The HOA’s members are homeowners who live in the area covered by the HOA.
While every HOA makes its own rules, all HOAs set and enforce neighborhood policies. These policies can cover anything from grass length and acceptable paint colors to guidelines for community amenities and everything in between.
HOAs also provide access to amenities and services like security and maintenance.
Who manages an HOA?
HOA management can vary. In areas with individual homes, the HOA is often managed by an elected board.
In planned or townhome communities, a real estate developer may play a role while a property management company may be involved in a condo association.
In general, policies are decided by the HOA and implemented and enforced by the board.
Who pays for the HOA?
HOAs aren’t free. All HOAs come with a monthly or annual fee. Its cost will be based on the community’s needs. A community with a functioning pool and rec center will likely have higher HOA fees than a community that’s spending most of its dues on landscaping in common areas.
Do I have to join an HOA?
The short (and only) answer is yes. You can’t opt out of an HOA. Buying in a community with an HOA means you’re agreeing to play ball. If the restrictive covenant (aka the restrictions HOAs put on how you can use your property) is too restrictive, you may want to start looking at other homes.
A Better Understanding of Homeowners Associations
At first blush, HOAs can seem a little … tyrannical. After living in childhood homes and sharing tiny apartments with roommates, many of us buy a home so we can finally call the shots! But what might look like authoritarianism is actually assistance.
Yes, there are rules to follow. But many of these rules are similar to what you’d find in a non-HOA community where neighbors are actively engaged in the neighborhood’s upkeep. If you’re interested in living in a clean, safe, well-manicured community with private amenities, an HOA may be right for you.
What are the benefits of HOAs?
Properly run HOAs should benefit homeowners. Some common benefits include:
- Use of exclusive amenities: Many neighborhoods with HOAs have amenities and services, like fitness centers, pools, parks, playgrounds and rec centers. These amenities are normally exclusive to HOA members and their guests and can be cheaper and more accessible than what you’d find with outside facilities.
- Extra security: Some HOAs use private security or neighborhood watch organizations to keep homes protected.
- Guaranteed curb appeal: HOAs usually have rules about property maintenance, like keeping the grass cut, raking leaves and clearing snow from sidewalks. Yes, it’s a lot of work, but the end result is guaranteed curb appeal. With an HOA enforcing the rules, you’re less likely to deal with the eyesore of a neighbor’s weedy, overgrown yard.
- Property repair support: Some HOAs partner with repair services that can step in when problems come up. Instead of calling around for plumbers when a pipe bursts, the HOA can assist.
What are HOA rules, regulations and conditions?
HOAs love rules.
Most HOAs keep their rules and policies in their Declaration of Covenants and Conditions and Restrictions (CC&Rs). Sometimes referred to as the HOA covenant or the governing documents, depending on how an HOA is managed, they can be updated as needs arise.
If you’re looking at homes in a managed community, your real estate agent can give you a copy to review before you buy.
Some basic rules and conditions a homeowner can expect to find in CC&Rs include:
- Living and dwelling limitations (think: the home’s design, landscaping options, aesthetic exterior choices and the number of pets allowed)
- Use of liens
- How violations will be enforced or penalized
- Whether a home can be rented out short term or long term
- Expected fees (including annual fees and fines related to HOA rule violations)
Do yourself a favor: Don’t skim the CC&Rs. If there are rules you don’t think you can live with (pun intended), make that decision before you start unloading the moving truck.
If you can’t stay off your phone, you might as well see if the HOA has a social media account or a presence on a real estate community board or forum. A lot of them do. Monitor posts to get a better idea of exactly how hands-on the HOA will be.
HOAs vs. Other Associations
There are also condo-based associations and property owners associations out there. The differences go beyond what they’re called. There are variations in how these kinds of groups are managed.
If you’re looking at a condo or townhouse community, for example, knowing how alternative forms of management work can help you make a better-informed purchasing decision.
It’s like an HOA for condominium communities. While HOAs control the common spaces in a community, homeowners own the entire house and land they bought.
With a condo-based association, the owners own the space within their unit but the condo association is responsible for the spaces between units and the property as a whole.
Property owners association (POA)
Instead of managing a specific building or neighborhood, POAs generally have a wider reach and can encompass a wider range of building types.
While community assets may be under POA management, these organizations can also reach a little further, delving into issues like business policy and local zoning.
Unlike HOAs, neighborhood associations are volunteer organizations that come together around a location to meet the neighborhood’s needs. They tend to focus less on property ownership and more on neighborhood advocacy and events.
Essentially, they give citizens a voice, forum and space to improve the neighborhood. They also reach into business policy and local zoning, but it depends on what the community sees a need for. Some may even be nonprofit organizations.
3 Things To Know About an HOA
If you’re considering a home in a community with an HOA, you’re in good company. Over 74 million U.S. residents are living in properties with an HOA or condominium association.
If you’re looking at a home that requires HOA membership, there are a few things you’ll want to keep in mind.
The HOA’s financial situation
HOAs are essentially tiny businesses. They collect funds and use them for community betterment – at least in theory.
Not all HOAs are run and managed responsibly. Do your research to reduce your chances of tying yourself to a property that’s under the watch of a poorly managed HOA.
Here are some potential red flags you should look out for:
- Is there enough in the reserve fund and insurance coverage for vital repairs
- How much debt is the HOA carrying
- How often are annual assessments raised
- How good are the accounting and reporting systems
If any red flags start getting raised, proceed with caution.
The HOA’s amenities
If you’re coughing up cash for membership, you should feel like you’re getting something valuable and worthwhile in exchange.
HOA amenities can range from tiny, unmanned kiddie pools to fully equipped gyms.
Don’t be misled by snapshots on social media. Visit all listed amenities IRL. And make sure you know what policies and rules apply to use them.
The future of the HOA
The current state of the HOA is one thing, but the future of the HOA is another. While some HOAs prioritize the status quo, other HOAs try to expand and improve.
Once you feel good about the HOA’s financial situation and amenities, start thinking about what’s coming down the road. Ask about any future projects in the works that will improve the look of the community or increase offered amenities.
And while you’re asking, make sure they tell you how any future changes might impact future fees.
HOAs Can Be a Good Thing
You’d never buy a house without at least seeing it, and you’d never join a club you didn’t know anything about. Apply the same philosophy to HOAs. Don’t become a member until you’ve pored over all the details you’ll need to make an informed decision.
HOAs have a lot to offer homeowners, but with great amenities comes great responsibility.
Home is worth it.
The mortgage process can be exciting, and we’ll be with you all the way. Take the first step to owning a home. You’ll be glad you did.
The Short Version
- Many homes in the United States are part of a homeowners association or HOA
- Before buying a home, it's important to know if the property is part of an HOA and what that HOA cover
- If your home is a part of an HOA, you can’t opt out of HOA membership. You’ve got to follow its rules and pay its fees
Foundation for Community Association Research. “The Community Association Fact Book 2020.” Retrieved November 2021 from https://foundation.caionline.org/wp-content/uploads/2021/07/FB_Narrative_2020.pdf