What Is an HOA?

HOA simply stands for “homeowners association.” These are private organizations that oversee and manage certain types of residential communities. This most often includes neighborhood subdivisions, planned communities, or condominium buildings. Some states consider condominium associations distinct from HOAs. 

The goal of a homeowners association is to preserve the common interests of the residents who live there. They also focus on preserving property values within that neighborhood or living space. 

To that end, a board of directors governs HOAs and sets and manages the rules of the community. Members typically pay monthly or annual fees to be a part of the homeowners association. In addition, there can also be fines for violations of existing regulations. 

The Declaration of Covenants, Conditions, and Restrictions spells out these rules, which can include things like: 

• Guidelines on choosing paint colors for fences and external buildings 
• Restrictions on external buildings such as sheds or dwelling units 
• Rules regarding lawn ornaments and political signage 
• Regulations surrounding noise level and quiet hours 
• Restrictions on the type or size of your pets 
• Rules for the use of common areas and amenities 

Keep in mind that an HOA differs greatly from a “neighborhood association.” 

Neighborhood associations are typically voluntary associations between neighbors for a common purpose. HOAs, on the other hand, are often mandatory when living within a particular residential area or community. 

HOA fees are monthly or annual fees that you’ll pay directly to the board or management company. They can range from a few hundred dollars per month, though some luxury neighborhoods can impose fees in the thousands. They can also impose special assessments on homeowners to cover the cost of immediate needs if the HOA reserve fund is low. 

What do homeownership association fees cover? The answer varies depending on the nature of the community and how the HOA board members allocate the money. Generally, these HOA dues cover the cost of things such as: 

• Maintenance of amenities and common areas (pools, tennis courts, playgrounds) 
• Utilities for common areas (water, electricity, etc.) 
• Insurance for amenities and common areas 
• Trash pickup and recycling 
• Landscaping 
• Security 
• Pest control 
• A reserve fund for future maintenance or improvements 

Some condominium associations can also use these fees to cover maintenance and repair for the actual buildings. However, this is not something you’d see in an HOA for residential developments. 

An HOA enforces rules for property owners who live in the community. When you buy a home within the neighborhood, you’ll pay fees and be subject to the rules and regulations of the HOA. Most are incorporated, meaning they must conform to established state laws. 

Are you required to join an HOA to live in that community? Generally, yes, which means you’ll want to learn as much as you can about fees and governance before committing. 

Homeowners association fees are separate from mortgage payments but can affect your eligibility for a mortgage. 

Now that you know more about how an HOA works, should you commit to buying a home in one of these communities? You might want to consider the pros and cons. This decision will impact your day-to-day living for as long as you own your home. 

HOAs have their benefits as long as you can navigate the complexities of HOA fees, terms, and conditions. It helps to have the right guide. Getting assistance from a real estate professional can empower you to make well-informed decisions about your next home purchase.