HOA: What’s a Homeowners’ Association & How Does it Work?

Does your dream home come with a Homeowners’ Association (HOA)? Are you curious about what that would mean for you as the homeowner? Let’s explore what an HOA does. We will also examine some of the pros and cons of living under their governance.

What is an HOA?

An HOA is an organization that governs a community of homes. The type of home can vary. An HOA may be organized to oversee condos, townhomes, or a neighborhood of single-family homes. According to the Foundation for Community Association Research, 30% of the population in the United States now resides in a community association.

When you live in an HOA, you must comply with their Covenants, Conditions, & Restrictions. Also known as CC&Rs, they outline what can and cannot be done to your home and what is the responsibility of the HOA. The CC&Rs commonly include regulations such as parking rules, upkeep expectations, and processes for making changes to the outside of your home or settling neighbor disputes.

In addition, if a homeowner does not comply with the rules or governances of the HOA, they could be subject to fines until they comply with the organization’s rules.

What are the fees associated with an HOA?

Fees vary widely by HOA. Some charge less than $100 a month, while others charge about $1,000 a month. The HOA will collect the dues monthly or annually. The dues are used to run the association.

In addition, an HOA may collect fines from homeowners not following the CC&Rs. Or, they may impose a special assessment as a large one-time fee to cover a project in the association that falls beyond the scope of the budget.

What benefits will they provide?

Monthly dues can vary because their services vary. In some cases, an HOA will cover all gardening, exterior work and other community amenities (such as a pool or gym). Some even pay for utilities.

In other cases, the HOA may act more as a guide to oversee compliance with home upkeep and smaller community spaces. They may be in place to help the neighborhood maintain property values by ensuring the neighborhood’s aesthetic remains favorable.

What if I break a rule?

Breaking a rule could lead to a warning. If it is not addressed, then it may become a fine. It is also important to consider the annual or monthly assessments as part of your mortgage payment, much like your insurance and property taxes. Failure to pay the annual assessments could, in the worst-case scenario, lead to a lien on your property. Check out Washington’s detailed Homeowners’ Association laws.

Where can I learn more about an HOA?

When you’re thinking about purchasing a home that’s part of a Homeowners’ Association, do your research and speak to potential neighbors. You should be completely aware of what they offer as well as their rules, fees, and regulations. HOA documents such as the CC&Rs should be disclosed in your home purchase paperwork. Read all the homeowner expectations and the benefits provided by the HOA carefully. This will help you better understand what your new community will entail.

HOAs have pros and cons. It’s important to understand the expectations and regulations in advance. For some, a higher monthly fee may be worth not having to deal with exterior maintenance and landscaping. For others, the restrictions placed on property improvements may not fit their lifestyle or desires as a homeowner. It is a personal decision, and every HOA is different.