Key Takeaways
- HOA fees range from $100 to $700 monthly, affecting your budget.
- HOAs maintain common areas, enhancing property values and appeal.
- HOA membership is mandatory, with rules and fees to follow.
- HOAs can impose fines for rule violations, impacting your finances.
Article Summary
A Homeowners Association, typically called an HOA, is a volunteer organization comprised of residents that governs a community.
Homeowners Association: Explained in Plain English
A homeowners association (HOA) is a legal entity that manages a residential community. HOAs are most common in condominiums, townhome complexes, and planned communities.
Homeowners associations protect neighborhood home values by investing in the community, providing amenities to its residents, and maintaining curb appeal standards. An HOA may also pay for shared services including building and lawn care, fitness room and pool amenities, and elevator maintenance.
In condominiums, the homeowners association pays for the building's master condo policy, which is necessary for a condo to get its warrantable condo certification.
Residents of HOA-governed communities must join their local association and follow its rules, known formally as Covenants, Conditions, and Restrictions (CC&Rs).
Rules are proposed and voted on by community residents and may include any of the following:
- Requirements for lawn and property upkeep
- Restrictions on external buildings, including sheds and accessory dwelling units
- Restrictions on fencing types and external paint colors
- Restrictions on political signage and lawn ornaments
- Restrictions on pet size and type
HOA membership requires monthly or annual fees to be paid directly to the association, not to the mortgage lender. While these dues are not part of the monthly PITI payment to the mortgage company, they are factored into a home buyer's debt-to-income ratio for loan qualification purposes.
Association dues vary by community.
Reference: What Does a Condo Association Control?
| Item | Does the Condo Association Control This? |
|---|---|
| Building exterior maintenance | Yes |
| Interior paint color | No |
| Pet restrictions | Yes |
| Choice of appliances | No |
| Pool and gym rules | Yes |
| Renting out your unit | Yes |
| Kitchen cabinet style | No |
Homeowners Association: A Real World Example
Imagine a first-time home buyer purchasing a property in a condo building. A homeowners association manages the building and, after settlement, gives the buyer a detailed handbook of community rules, known as by-laws.
Condo by-laws include notice of monthly dues, penalties for community violations, and information on attending regular HOA meetings. They also include regulations for short-term rentals, guidelines for balcony decorations, and restrictions on pets and pet sizes.
After moving in, the home buyer decides to become a pet parent, which the by-laws state requires HOA approval. The buyer attends an upcoming association meeting and asks the Board of Directors to allow a new dog in the building. The board asks about the dog's breed and its expected full-grown size, to which the home buyer replies. The board grants the home buyer's request.
Common Questions About Homeowners Associations
Get answers to frequently asked questions about homeowners associations, including rules, fees, and what to expect when living in an HOA community.
