What Is a Homeowners Association? HOAs—Explained

What is a homeowners association, and how will it affect your life?

Homeowners associations help ensure that your community looks its best and functions smoothly, says David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School.

For instance, if the pump in the community swimming pool stops working, someone has to take care of it before the water turns green and toxic, right? Rather than expect any one homeowner in the neighborhood to volunteer his time and money to fix the problem, homeowners associations are responsible for getting the job done. Think of it as similar to real estate property taxes that a homeowner pays for city and state services, except these fees go to pay for amenities and maintenance in your own planned community or condo building.

The number of Americans living in a home with an association is on the rise, growing from a mere 1% in 1970 to 25% today, according to the Foundation for Community Association Research. So, it’s wise to know exactly how such an association of homeowners works.

How much are HOA fees?

To cover these property maintenance expenses, homeowners associations collect fees or dues (monthly or yearly) from all community members. For a typical single-family home, HOA fees will cost homeowners around $200 to $300 per month, although they can be lower or much higher depending on the size of your house or condominium and the services provided. The larger the homeowner area, the higher the HOA fee—which makes sense, because the family of four homeowners in a three-bedroom condominium is probably going to be using the common facilities more than a single resident living in a studio condo.

Many HOAs pay property managers to oversee maintenance and deal with other real estate property issues.

In addition, most homeowners associations charge their members a little more in dues than monthly expenses require, so that they can build up a reserve to pay for property emergencies, amenities, and big-ticket items like repairing the roof and water heaters, or acquiring new carpeting, paint, and lights for the hallways.

If the association doesn’t have enough fees in reserve to cover necessary expenses, it can issue a special “assessment,” or an extra fee, in addition to your monthly dues, so that the repairs can be made.

For example, if the elevator in your condo building goes out and it’s going to cost $15,000 to replace it—but the HOA reserve account holds only $12,000—you and the rest of the residents are going to have to pony up at least an additional $3,000 in dues, divided among you, to make up the difference.

And yes, you as a resident still have to contribute your share of dues, even if your property is on the first floor.

HOA rules: What to expect

All HOAs have boards made up of homeowners in the complex who are typically elected by all homeowners. These board members will set up regular meetings where owners can gather and discuss major decisions and issues with their community. For major expenditures, all members of the HOA usually vote, not just members of the board.

In addition to management of the common areas, homeowners associations are also responsible for seeing that its community members follow certain rules and restrictions. Homeowners receive a copy of these rules from the HOA board, known as covenants, conditions, and restrictions (CC&Rs), when they move in, and they’re required to sign a contract saying that they’ll abide by them.

CC&Rs can cover everything from your type of mailbox to the size and breed of your dog. Some HOAs require you to purchase extra homeowners insurance if you own a pit bull, for example. Others have covenants and restrictions prohibiting certain breeds entirely. Many associations even have rules about what color you paint your house, what kind of curtains you can hang if your unit faces the street, and how long your lawn can grow. Its goal is not to meddle—it’s merely to maintain a neighborhood aesthetic. However, if you don’t like being told what to do with your home, living under the bylaws and rules of an association may not be for you.

What happens if you violate HOA rules?

That varies from place to place, but if you break the rules—or fall behind in paying your HOA dues—the consequences can be severe. The management could evict you from your property, or worse. Some HOAs have the right to foreclose on your property if you don’t pay your monthly fees or don’t follow the rules, says Bob Tankel, a Florida attorney specializing in HOA law.

So make sure you read your CC&Rs carefully so you know what to expect, and know the pros and cons of living in an HOA community before you buy real estate with a homeowners association.