Everything You Need to Know About HOAs
If you’re considering buying a condo, townhouse, or home in a planned community, you’ll likely encounter a homeowner association (HOA). HOAs manage shared spaces, enforce community standards, and collect fees from residents to maintain the community. Understanding how HOAs work—and evaluating them carefully before buying—protects you from surprises and helps you determine if HOA living is right for you.
What Do HOA Fees Cover?
Monthly HOA fees fund the maintenance and operation of shared community elements. Common coverage includes landscaping and grounds maintenance, exterior building maintenance (in condos and townhomes), community amenities like pools, gyms, clubhouses, and playgrounds, trash and recycling collection, snow removal, street and sidewalk maintenance, water and sewer (in some communities), and common area insurance.
Fees vary enormously—from $100 per month for a basic single-family community to $500+ for luxury condos with extensive amenities. The fee amount should reflect the services provided and the community’s financial health, not be evaluated in isolation.
What HOA Rules Cover
Beyond fees, HOAs establish and enforce rules—documented in the CC&Rs (Covenants, Conditions, and Restrictions)—that govern community life. Common rules address exterior modifications (paint colors, fencing, landscaping changes), parking and vehicle restrictions, pet policies (breed, size, and number limits), noise and nuisance standards, rental restrictions (minimum lease terms, percentage of units that can be rented), and home business operations.
Some buyers appreciate the structure that keeps the community well-maintained and protects property values. Others find the rules restrictive. Read the CC&Rs thoroughly before buying—they’re legally binding, and violations can result in fines or legal action.
Evaluating an HOA Before You Buy
Review Financial Health
Request and review the HOA’s financial statements, budget, and reserve study. A well-managed HOA has adequate reserves (typically 70%+ funded) for major future expenses like roof replacement, road resurfacing, or amenity upgrades. An underfunded HOA may need to impose special assessments—one-time charges to residents that can range from hundreds to thousands of dollars.
Check for Pending Litigation
Ongoing lawsuits involving the HOA can affect the community’s finances and your ability to get mortgage approval. Ask about any pending or threatened legal actions.
Understand Fee History
Review how fees have changed over the past five to ten years. Consistent, modest increases suggest responsible management. Large or frequent increases may indicate financial problems or deferred maintenance. Ask about any planned fee increases or special assessments.
Read Meeting Minutes
Recent board meeting minutes reveal the issues the community is facing, how the board operates, and whether there are any contentious matters. Frequent disputes, unpaid assessments, or recurring maintenance issues are red flags.
HOA Fees and Your Budget
Remember that HOA fees are part of your total housing cost. Lenders include them in your debt-to-income calculation when determining how much you can borrow. A $400 monthly HOA fee effectively reduces your mortgage buying power by $60,000 to $70,000. Factor HOA fees into your affordability calculations from the start.
Also consider what the HOA fee replaces. If the fee covers landscaping, exterior maintenance, water, and trash that you’d otherwise pay for individually, the net impact on your budget may be smaller than the headline fee suggests.
Get Expert Guidance on HOA Properties
A real estate agent experienced with HOA properties can help you evaluate the association’s health, understand the CC&Rs, and determine whether a particular community is a good fit for your lifestyle and budget. This evaluation is an important part of the overall home buying process.
Find an experienced agent through NearbyRealtors who can guide you through the HOA evaluation process and help you find a community that matches your expectations and budget.