Homeowners Association

Buying a new home is so much more than just a mortgage transaction. Everything from selling your home, to moving all of your belongings, to making your first mortgage payment on your new home is all a part of a much grander situation of relocating. There are so many different and unique aspects to relocating, that it’s almost impossible for two different home buyers to have the same experience.

While some people choose to live as far from the hustle and bustle of large population centers as possible, there are others who love to be right in the middle of the chaos. Every neighborhood is different, and there are a plethora of different types of residential communities for buyers to choose from. Still, buying a home, no matter if it’s a condo, a town home, or even a single-family residence, opens up the possibility of entering into, and becoming a part of one of these communities.

Many planned living developments have a simple form of “government” in place to make sure that the community remains a great place to live for its inhabitants. These communities typically rely on some form of management entity to help take care of the community’s daily operations. Along with the management, there is usually a board or comprised of prominent, elected residents of the community, to represent the community as a whole.

These “Homeowners Associations” function all over the country, in condominiums, gated communities, and residential areas and more. Living in a community with a Homeowners association may require that you follow its rules and regulations, as well as pay dues to the association as a resident, but it is all done to make the community a fair and pleasant place to live for all of its residents. Granted, not every homeowner has a homeowners association to contend with, but they are still a large presence in many residential developments.

What is a Homeowners Association?

A homeowners association or “HOA” is a localized organization or governing body within a subdivision, planned community, or condominium. An HOA is expressly designed for the purposes of creating and enforcing rules for properties within its jurisdiction. For home buyers who purchase homes under the jurisdiction of a homeowners association, membership with the association is generally required. Being a member of an HOA typically means that you must adhere to whatever community rules are laid out by the association. In most cases, you’ll also need to pay membership fees known as HOA dues.

The extent of power held by a homeowners association can vary from community to community, as can any rules they have and the amount of dues they require. Some associations are mostly a background force with very little interaction, while others can be quite pervasive, even enforcing strict limitations as to what homeowners can or cannot do to their property.

While homeowners associations act as governing bodies, for the most part, they are incorporated, and therefore must operate within the laws set by the state they are located in. Depending on the state, the type of residential community dictates the type of homeowners association needed. For example, a condominium communities and cooperative communities each need a specific type of association to govern them, but these are not legally regarded as homeowners associations. For this reason, the broader term “community association” was created to encompass all of the different types of organizations that exist.

How does a Homeowner’s Association work?

Homeowners associations are not unlike small governments that create and enforce rules and regulations for the residents within the communities under their jurisdiction. Still, to have authority over even a small community is no laughing matter. In fact, homeowners associations can have serious legal power over their residents. So, before you decide to move into a residence governed by a community association, it’s best to gain some understanding of how they work.

Homeowners associations are usually formed in planned developments with a board of elected residents serving as directors. Typically, these directors are tasked with enforcing and upholding predetermined rules and regulations described in the association’s governing documents. These governing documents typically include a Declaration of Covenants, Conditions, and Restrictions (CC&Rs). This document details the conditions and expectations set for the community’s homeowners and their properties. Usually, CC&Rs include (but are definitely not limited to) items like structural restrictions (i.e. the type of fences or landscape allowed), what type or size pets are allowed, and even minor things such as restrictions on the color of paint on the property, or how long your grass is allowed to grow.

The declaration of covenants, conditions, and restrictions should also detail the penalties for violating the CC&Rs. Violation of a homeowners association’s CC&Rs generally results in fees, forced compliance or, in some cases, litigation. The board of directors serves to uphold these rules and enforce them by initiating recourse with violators. They also serve as an organized group who oversee the general operations of the community and deliberate and make choices on matters on behalf of the community.

If members or directors want to remove, amend or add rules to the CC&Rs, it must be voted on by the board as well as the members of the community. Voting plays a huge part in a homeowners association. Generally, everything from elections to the hiring of third-party contractors requires a vote from either the board, the community, or a combination of both. This makes it easier for the board to reflect the wishes of the community as a whole.

HOA Dues

HOA Dues

By now, most homeowners and some home buyers can attest to the fact that buying a home, dealing with closing costs, and making monthly mortgage payments can be unnervingly costly. As it stands, a home purchase is generally the largest investment the average person will make in their lifetime. Even after the dust settles after a closing, and a home buyer has finally become a homeowner, the monthly costs of principal, interest, taxes, and insurance (PITI) can result in a steady leak of cash from any bank account.

Sadly, there’s always room for more costs to be added into the mix for a homeowner. Fees such as maintenance, utilities, and lawn care aren’t even typically brought up when purchasing a home. HOA dues, while typically found on a listing for any given property under an HOA’s jurisdiction, are also one of those lesser-known costs. Still, there are about 345,000 community associations in the United States, with about 69 million residents who are expected to pay HOA dues.

The dues collected by a homeowners association, sometimes called HOA fees, are a common part of being an HOA member. On average, HOA fees can be anywhere from $150 to $300 per month. Still, every community is different, and HOA fees can be much lower or higher, depending on the state, or location of the community.

No one likes the prospect of extra costs to have to deal with, but HOA dues are an important part of any community association. HOA fees are collected by the association for the purposes of maintaining and improving properties and common areas (including amenities) in the association.Typically, the more amenities offered to the residents, the higher the HOA dues will be.

For example, a gated community with unarmed security, a pool, and a clubhouse will typically require higher HOA dues than the average subdivision. In that regard, residents of condominiums typically have high HOA dues, as most condominiums come with an array of amenities that may not make sense to include in a community of single-family houses, such as a gym or spa. Still, it is important to understand that HOA fees are collected to help maintain the quality of life for the community’s residents in addition to protecting property values for the property owners.

Because condominiums and town homes are basically multiple parties living in the same building or complex, the residents there are expected to pay for the costs of general maintenance for any common areas. The dues are used to maintain common elements and amenities like landscaping, pools, gyms, exterior paint, elevators, parking garages, clubhouses, sidewalks, roofing and much more. Of course, some of these elements can also be found in communities of single-family homes as well.

There are even some HOAs of single-family unit communities where the fees collected help to alleviate some of the financial burdens of home maintenance. For example, some HOAs have contracted roof maintenance companies or landscaping contractors, whose payment comes from the HOA dues provided by the residents. Not having to worry about finding and paying third-party contractors to handle certain repairs or upkeep is a huge benefit to many homeowners.

Besides monthly homeowners association fees, HOAs may need to collect money from their residents in the event of an unforeseen circumstance. For example, a major elevator malfunction could occur, or a storm could cause serious roof damage to a common area. In this situation, homeowners associations may not have enough money in their reserves to cover the cost of repairs.

If this proves to be the case, then homeowners may be charged a “special assessment,” which can be significantly higher than the standard monthly dues. It is not uncommon for these special assessments to range in the thousands. The funding collected from these special assessments is put towards the costs for whatever repairs need to be done.

Benefits of a Homeowners Association

Living as a member of a homeowners association may sound like a drag at times, but it isn’t all bad. After all, the whole point of a homeowners association is to preserve or improve the quality of life for the residents under its jurisdiction. While the rules may be strict at times, many HOAs have plenty to offer their residents.

The best thing about communities under a homeowners association is that most of the time, residents have access to amenities. Amenities vary by community, but they are all maintained and staffed through the homeowners associations of each community. Whether it’s a pristine pool with a lifeguard on duty, a clubhouse to throw birthday parties in, or a well-stocked fitness center, these can only exist and operate through the management and care of a homeowners association and the dues paid by the members of that association.

In terms of costs, while a monthly HOA due seems like a headache, it is important to find out what that due covers. A good portion of the time, things like trash pickup, landscaping, and sometimes even homeowners insurance for the exterior of a home is all included in the monthly HOA payment. This frees up a ton of responsibilities that a non-HOA member may have to deal with over the span of homeownership.

Homeowners associations are also perfect places for people looking to hold on to their homes and build equity. You see, because of the strict rules, wonderful amenities, and the constant upkeep neighborhoods, condos, and town homes that are part of homeowners associations have a lesser known benefit. With everything that goes into a community association, they happen to excel at maintaining and even growing property values.

Drawbacks of a Homeowners Association

HOA drawbacks

It goes without saying that being a member of a homeowner’s association has some pretty sweet benefits. However, it does come at a price. Literally, homeowners associations dues are probably the biggest drawback to homeowners associations in general.

The worst part is, the nicer the amenities and the prettier the neighborhood, condominium, or townhouse development is, chances are those HOA fees are going to seriously hurt your pocket. Love the decked out fitness center? You probably paid for it. In love with the cookie cutter landscaping? You probably paid for that, too.

Make no mistake, HOA dues can be pretty minimal in certain communities, but you typically get what you pay for. One might even go as far as to say that the cheaper the dues, the worse the association, and, as a result, the worse the amenities. However, more expensive doesn’t always mean better; there are many cases of communities with pricey HOAs that still don’t offer high-quality services and amenities to residents.

If money isn’t an issue, there is still one thing that seems to be a pretty big disadvantage of the homeowners association lifestyle. With all of the clearly stated rules, and the not-so-fine print, it is easy for a homeowner living as an HOA member to lose that sense of freedom a homeowner typically feels. Honestly, most people don’t like being told what to do-- especially not in their own home.

It can be a major let down when you can’t paint your house the color you’ve always dreamed of painting it. It might also be disheartening when you aren’t allowed to have certain pets. For many, being home is supposed to mean getting away from everyone else’s rules and enjoying the freedom of being in your own personal sanctuary. And for some, HOA rules can severely restrict their sense of personal freedom.

However, that's not to say that HOA’s are just evil, small-scale dictatorships. But, in many cases, they do make homeowners feel as though they are co-owning with the association. It’s like all of those fights with your college roommate over how to set up and decorate your dorm room, only the roommate is also a part of the faculty, and they are with you for the long haul.

Homeowners Associations: In Review


Living under a homeowners association can be a blessing, a curse, or that sweet spot right in the middle. Having to pay an extra fee each month on top of your average required monthly mortgage payments is always a drag. Still, when you get 24/7 access to a private tennis court, can you really be that upset? (And none of us even play tennis!)

There is security in a homeowners association. Security in your home purchase investment, security in knowing you won’t have to worry about some of the more frustrating aspects of maintaining a home, and... literal security, depending on the association. Sure, giving up some freedoms might feel like a loss, but were you really going to be happier with a flamingo-pink colored home?

If you answered yes, we’d really love to hear from you. On the flip side, if you want to learn more about homeowners associations and what to expect from them, don’t hesitate to give us a call and speak with a home.loans mortgage expert.