9 min read Jan 15, 2024

What Is a Homeowners Association (HOA)?

A Homeowners Association (HOA) is an organization in a planned community or condo complex. It creates and enforces rules for the property and its members. The responsibilities of the HOA varies based on the property type.

The most important function of HOAs is to protect the community’s market value. HOA boards manage maintenance and finances. Additionally, members of HOA pay the board certain fees to help them fulfill all their functions.

The buyer needs to check if a home belongs to an HOA before. If you have never been a part of an HOA, this blog will help you learning everything about an HOA community.

Key Takeaways

  • Understanding HOAs: Homeowners Associations create rules for communities. They also protects the value of the property through regular management and regulation.
  • HOA Membership: A person automatically becomes a member of the HOA after buying a house in an HOA community.
  • Common HOA Rules: HOAs enforce regulations about property appearance, resident conduct, and usage within the community.
  • HOA Fees and Insurance: The HOA collects fees to maintain the community’s needs and provide services. It also need insurance coverage for property and liability to protect homeowners’ investments.

What Is a Homeowners Association?

A Homeowners Association is formed in communities with single-family homes and multiple-unit buildings. The core of an HOA is its board of directors, who are primarily responsible for making and enforcing rules for the residents. These rules differ from association to association.

The guidelines set forth by the HOA are typically described in a legal document called the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). The guidelines cover structural aspects and minor aesthetic choices for the houses.

However, if a member violates of the guidelines by any member lead to penalties. In extreme cases, the HOA might pursue legal action like litigation.

HOAs are financially sustained through fees paid by the residents. Property owners must pay HOA fees, which fund the maintenance of common areas. They are also responsible for collective lawn maintenance and landscaping efforts.

Homeowners Association Fees 💰

If you buy a house in an HOA area, it is mandatory to pay HOA fees. Each Homeowners Association management decides its own services and payments.

The board collects fees based on property type, location, and the amenities provided. It is usually collected on a monthly or quarterly basis as per the guidelines.

The average HOA fee in the US is around $200 to $300 every month. But it could go as high as $100 to over $10,000 in luxury HOA communities. Neighborhoods with multiple amenities have higher fees.

HOA members also have to pay for special assessments. The board collects this during natural calamities for unexpected repairs.

What Happens If You Can’t Pay Your HOA Fees?

The HOA board often grants a grace period if you face challenges or forget to pay your HOA fees. After this, the association gives the member a warning and charges them potential late fees.

If the dues remain unpaid after the warning, your HOA can initiate various measures. They can:

  • Issue a demand letter for overdue fees.
  • Propose a repayment plan.
  • Limit your access to amenities like parking or the fitness center.
  • Start a foreclosure process.
  • File a lawsuit in the small claims court.
  • File a lien against your property.

Are HOA Fees Included in Your Mortgage?

No, you pay HOA fees to the association, not the lender. The lender still considers it a part of your housing cost which affects your borrowing capacity.

Your lender’s escrow accounts only include your property taxes and homeowners insurance premiums. However, some lenders may agree to include HOA fees on your request.

Can You Write Off Homeowners Association Fees?

You cannot deduct the HOA fees from your taxes if the purchased property is your primary residence. But as a rental property owner, the IRS permits HOA fee deduction. An HOA fee might not be deductible if it covers special improvement assessments.

» Tax Deductions: Learn about the deductions you can use to claim tax breaks as a homeowner.

HOA Board vs. HOA Management

In an HOA community, it’s essential to distinguish between the HOA board and management. While both are similar, they have a few key differences:

HOA Board:

  • Consists of elected volunteers from the community.
  • Oversees shared services, area upkeep, and HOA fee collection.
  • Administers the reserve fund and enforces CC&Rs.
  • Arranges meetings, activities, neighborhood watch committees, and other events.

HOA Management

  • A professional third-party company that helps an HOA board fulfill its duties.
  • The HOA board pays the HOA Management company.
  • Executes board directions and manages daily operations.
  • Charges additional fees to oversee the community.

Homeowners Associations vs. Community Associations vs. Property Owner Associations

Homeowners Associations, Community Associations, and Property Owner Associations are legally categorized differently:

HOAs actively incorporate and function under state laws. However, some states treat condos and co-ops differently. This distinction arises due to the varying property interests of these organizations.

The term “community association” covers HOAs, includes condos, and co-op boards under one label.

An HOA and a property owners’ association primarily differ in their membership scope. It includes anyone with an interest in the real estate value of the community. It also consists of those who aren’t property owners themselves, unlike HOAs. 

Pros and Cons of Living in an HOA Community

Living in an HOA community has its own pros and cons. Here’s a list to help you decide:


  • Offer Management Services: HOAs offer management services like security, landscaping, and community amenities oversight for tidy and well-maintained neighborhoods.
  • Manage Exterior Maintenance: An HOA manages repairs, ensure street cleanliness, and handle sidewalk maintenance.
  • Enhance Property Value: Home upkeep rules like maintaining a tidy lawn and adhering to specific paint colors rise your property’s value.
  • Exclusive Amenities: Access to pools, gyms, clubhouses, or security can be a perk.
  • Community Engagement: An HOA events can foster neighborly interactions and connections.
  • Resolve Conflict: An HOA boards address and mediate disputes between neighbors for rule violations.


  • Lose Home Control: You can lose control over HOAs dictate home design, colors, pets, and more by limiting your choices.
  • Unwanted Budget Stretch: The association may suddenly charge HOA fees sometimes in the form of special assessments. This can strain your monthly housing budget.
  • Pay for Unwanted Amenities: You pay for amenities you might not use.
  • Follow Strict Enforcement Laws: Some HOAs are very quick in sending violation notices. They do so even for the slightest infractions.
  • Compulsory Knowledge of Rules: Inadequate understanding of rules may result in extra payments to the HOA.

The legal power of an individual HOA varies and is closely associated to their specific design. Its authority is typically outlined in the community’s CC&Rs.

Local HOAs remain bound by legal parameters. They must adhere to state and federal laws. This includes enforcing violations, such as the Fair Housing Act.

Do Homeowners Associations Need Insurance?

A homeowners Association requires insurance much like individual homeowners. This insurance shields residents’ investments and safeguards co-op shareholders’ interests. Furthermore, it protects against unforeseen circumstances.

Different types of HOA insurance cater to various needs:

  • Hazard Insurance: Safeguards against natural disasters, fire, water damage, vandalism, and theft. Hazard Insurance also covers common structural components of the property like hallways, elevators, and stairways.
  • Directors and Officers Liability Insurance: Shields board members from potential legal actions that arise due to their responsibilities. It also covers the damages incurred during disputes.
  • Fidelity Insurance: Protects against internal misuse or theft of property by staff, contractors, association members, or property management representatives.
  • Liability Insurance: Covers medical expenses and repair costs for injuries or losses within the association. It is essential due to higher accident potential in common areas.

What Are Some Common Rules and Regulations of an HOA?

Homeowners Associations operate under a framework of rules outlined in CC&Rs. Some of them includes:

  • Appearance Standards: Regulations may govern aspects like paint colors, roofing materials, siding, and landscaping. They also covers additional structures like fences or pools.
  • Parking Rules: HOAs may dictate guidelines for driveway and street parking, ensuring a neat and organized community.
  • Decorations: There may be some rules on outdoor and holiday decorations to maintain a cohesive look.
  • General Tidiness: Keeping communal areas tidy often involves guidelines for garbage can placement.

Other common HOA rules extend to conduct within the community. This might include:

  • Noise Restrictions: Guidelines might limit excessive noise to maintain a peaceful environment.
  • Rental Policies: Regulations might govern long-term rentals or short-term rentals like Airbnb.
  • Business Use: HOAs might restrict you from using your property for business purposes.
  • Home Insurance and Occupancy Limit: Some HOAs require certain levels of insurance coverage and limit the number of occupants.
  • Pet Policies: HOAs may outline acceptable types and numbers of pets.
  • Smoking: Rules could include restrictions on smoking within common areas or units.

It’s essential to note that while these are common HOA rules, they vary between associations.

Final Word

Today, majority of townhouses or condos have an HOA to handle maintenance and more. The membership of an HOA brings rights and duties which has its own pros and cons.

HOAs play an important role in maintaining aesthetics and enhancing your property’s curb appeal. But remember, they can restrict what you can and can’t do with your very own property. 

That’s why choosing an HOA real estate is a key decision in your home-buying journey.

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Frequently Asked Questions

Can you refuse to join a homeowners association?

No. A home buyer cannot legally refuse to join a mandatory HOA. If you buy a house in an HOA area, you automatically become a member of the association and must follow its rules.

What does a Homeowners Association cover?

HOAs manage maintenance and decide on building renovation projects. It also enforces bylaws and imposes fines on non-compliant residents.

Do homeowners association board members get paid?

No. HOA board members serve the association without any financial benefit unless the bylaws of the board state otherwise.

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