From: the National Association of REALTORS®
In many housing markets, homeowners associations (HOAs) and other community associations can be
a part of the home buying (and owning) experience. Here’s what prospective buyers should know:
What are HOAs? HOAs are organizations in residential communities that create and enforce rules for
the properties and residents within their purview. HOAs can offer residents access to shared spaces and
facilities, such as pools or clubhouses, and act as governing boards to help maintain these common
areas. While HOAs are often associated with master-planned neighborhoods or gated communities of
single-family homes, community associations can also include some shared properties with individual
units such as townhouses and condos.
What are HOA fees and special assessments? Homeowners in HOA communities are required to pay
monthly fees (sometimes paid quarterly or annually). These may be used to cover the cost of
landscaping, routine maintenance, neighborhood upkeep, shared amenities and common areas, and
other operational expenses—including contributing to reserves to plan for and fund longer-term
improvements or unplanned costs. HOAs may also collect special assessments for costs such as
emergency maintenance needs or other major projects that reserves are unable to cover. As such,
prospective homeowners should consider HOA costs when budgeting and preparing for
homeownership.
Who runs HOAs? Most HOAs are non-profits run by volunteer boards. Volunteering for the HOA in your
neighborhood or building can provide better insight into how your HOA is run, allowing you to
participate in important community decisions. HOAs have bylaws that guide how they function,
including election rules, board member responsibilities, and meeting protocols.
What kinds of rules can HOAs enforce? In addition to bylaws, HOAs have covenants, conditions, and
restrictions (CC&Rs) and rules and regulations to help maintain uniformity and protect real estate prices.
These can vary significantly, but may cover things such as landscaping, noise, parking, pets, home
exteriors (including decorations), property modifications, and common area policies. That said, there are
limitations to HOA rule enforcement; specifically, HOAs cannot enforce rules that conflict with local,
state, or federal law.
Do condo associations differ from HOAs? Condos, or condominiums, are a type of building or complex
that can have HOAs or condo associations. A key difference between single-family homes in HOA
communities and condos is the ownership structure. Typically, condo buyers purchase the units they
live in and an ownership interest in the building’s common areas; in contrast, owners of individual
properties in an HOA community own their property and lot, but common areas are owned by the HOA
itself. However, exact ownership structures can vary.
What are co-ops? Co-ops, or cooperative housing, are a type of shared ownership arrangement that
only exists in certain states. Unlike condos, people living in a co-op own shares in the entire complex
and have a proprietary lease on a specific apartment. Interested buyers must apply and be approved by
the co-op board, which is made up of other residents.
What are the benefits and drawbacks of HOAs? Many prospective buyers are drawn to the amenities,
enhanced security measures, and maintenance support that HOAs can offer. However, the added costs
of HOA fees and special assessments can be a financial burden for some buyers, and others may be
concerned about potentially restrictive regulations. Your real estate agent can help you determine if an
HOA community is right for you based on your needs and preferences.
Practices may vary based on state and local law. Consult your real estate professional where you are purchasing a home.
Cindy Siok, REALTOR® is a member of the National Association of REALTORS®