HOAs: How do homeowners associations work and can you opt out?

If you buy a property in an HOA community, you’ll have pay dues and follow rules set by the HOA.



Elissa Suh

Elissa Suh

Senior Editor & Disability Insurance Expert

Elissa Suh is a senior editor and disability insurance expert at Policygenius, where she also covers wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

Published April 22, 2020 | 5 min read

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Key Takeaways

  • If you buy a property in a planned community with an HOA, you will automatically become part of it and have to pay monthly dues

  • HOAs pay for maintenance and repairs for shared amenities and help settle disputes

  • HOA rules may restrict what a homeowner can do with their home, like putting up a fence or painting the house a certain color

  • Monthly HOA dues can be anywhere from $100 a month to $1,000 a month or more

When you’re buying a house, you may find out that the property is part of a homeowners association (HOA). Townhouses, condos, and even single-family homes that are part of a subdivision or development might have an HOA structure. Homeowners are required to pay fees to the HOA, or homeowners association, which are used for general maintenance and repairs for shared amenities in the community, like poolhouses or landscaping — a big benefit for homeowners who don’t want to waste time with the responsibilities of property management.

All of this ensures the aesthetics-upkeep of the community. But going even further, the HOA has rules, or covenants, about what a homeowner can and cannot do to their home. While the HOA rules might prevent a neighbor from posting an unsightly banner or leaving the kids’ bikes out on the lawn, they often also prevent you from planting a certain type tree or painting your door a particular color that’s not approved by the HOA board.

HOA fees can be anywhere from a few hundred to a few thousand dollars a month, so if you’re interested in a property attached to an HOA, you should factor in the financial costs when budgeting for your mortgage.

How does an HOA work?

A homeowners association is an organization that governs a planned housing community, like a townhouse community, a condo development, or even a subdivision of detached single-family homes. HOAs pay for the maintenance and upkeep of common spaces and amenities and handling disputes between homeowners.

A homeowners association can be run by a board of directors, made up of residents who volunteer and are elected, or by a management company (which might happen with larger residential communities or condo buildings), or a combination of both. The HOA will conduct a board meeting that is usually open to all HOA members to air complaints or to discuss any relevant issues.

An HOA for a condo is sometimes referred to a condominium owners association (COA).

Most of the time, if you buy a property in a residential community or development with an HOA, it will be mandatory for you to join it and follow the covenants.

HOA rules

Every HOA has its own set of rules and regulations formally known as the CC&Rs (Covenants, Conditions, and Restrictions). It may stipulate that the grass should be no more than a certain height, that your shutters should only be a certain color, or that you can’t park more than two cars in your driveway at a given time. HOA rules may even dictate quiet hours.

HOA rules can be restrictive, but how rigid the conditions are will depend on your particular homeowners association. When you’re shopping for a house, your real estate agent can help you find out more details so you can see the rules before you put in an offer.

Learn more about what a real estate agent does.

How much are HOA fees?

Homeowners association fees, called dues, might be paid monthly, quarterly, or annually. HOA fees may range $100 per month to over $1,000 per month, depending on how upscale the development is. For example, a townhouse community with a golf course or a luxury condo in an expensive city will probably have higher HOA fees than a run-of the mill residential development with single-family properties.

Additionally, if there are more HOA members (more homeowners in the community) the dues may be less. If your HOA membership is small, then you can expect to pay more compared to a larger HOA in a similar demographic. If you're thinking about buying a property that has an HOA, don't forget to factor the fees into how much house you can afford. Expensive HOA fees may change your housing budget and how big a mortgage loan you need to take out. When you do settle on a house, You may have to pay a portion of the HOA dues up front as part of your closing costs.

What does the HOA pay for?

The HOA fees are generally used to pay for maintenance and repairs of common areas and amenities. What is specifically included depends on your HOA. Every homeowners association is different, and not all planned communities require the same level of upkeep.

Common things an HOA may pay for include the maintenance of clubhouses, pools, or recreation centers, parking garage, garbage pickup, snow removal, landscaping, and security measures, like an electronic gate or video cameras.

Homeowners may have to pay more for assessments in addition to the monthly dues if a larger repair is needed and the HOA doesn’t have enough money in its reserve fund to cover the expense. (For example, if the exterior facade of a condo building needs work.) Homeowners associations typically have their own HOA insurance policies to help pay for these repairs, but when it’s not covered, the homeowners will have to shoulder the cost.

What can an HOA legally do?

In addition to the covenants, other important HOA documents include HOA bylaws and articles of incorporation. This is all to say that the HOA board members are more than just a group of homeowners playing at politics in their neighborhood. An HOA is governed as if it were a private corporation or a nonprofit. The documented rules and regulations are legally binding and enforceable.

Homeowners who fail to pay dues or comply with HOA rules may be fined. HOA may even be legally allowed to sue you or impose a lien, which would cloud the title and might lead to foreclosure if the lien is unpaid for a long period of time.