Homeowners associations (HOAs) have become increasingly prevalent over the recent years. According to the Foundation for Community Association, 30% of Americans live in a community association, including planned communities, condominium communities and housing cooperatives. For some homebuyers, an HOA can make or break the decision to move into a neighborhood. Meanwhile, others might not even be sure what an HOA is or what it does.

An HOA is an organization of homeowners with an interest in a community who work together to ensure the community and its amenities thrive. Most are incorporated as non-profits and fall under HOA-specific state laws and statutes. In a few states, homeowners associations are governed by the same laws as non-profit corporations. 

While some states don’t have any laws to govern HOAs, others have extensive statutes focused solely on homeowners associations. The states with the most laws on the books also have a significant number of homeowners associations registered. Florida and California are the two largest, with each state having nearly 50,000 HOAs registered.

In the past, many homeowners associations were formed by existing homeowners, who decided to organize and incorporate. Today, HOAs are almost always formed when the developer is building a subdivision. 

Typically, if you buy a house in a community with an HOA you’re automatically a member of the association. Once there are enough owners in place, the developer turns the HOA over to the community. They then put a board in place and develop the community’s Covenants, Conditions and Restrictions (CC&Rs) and proceed as a normal homeowners association.

HOAs aren’t new. They can be traced back to the early 1900s and the growth of localized improvement associations in the developing West Coast cities. Unfortunately, many early homeowners associations were developed to prevent certain classes from constructing or buying houses in the associations’ coverage area. 

These included minimum house construction costs and excluding buyers based on race and/or religion. These covenants were ruled unenforceable by the Supreme Court. However, they were often kept alive by deed restrictions and private contracts until the Fair Housing Act of 1968 was passed.

HOAs offer benefits like shared amenities and community building through organized events. However, they also come with costs in the form of fees and restrictions on property use.

• Expectations: The Covenants, Conditions and Restrictions (CC&Rs) spell out the expectations of living in the community, from behavior to appearance and more.
• Services and amenities: Access to pools, gyms, parks and more, along with security guards and snow removal and other services are covered through the HOA. For many homeowners, these would be more difficult and onerous to organize and pay for independently.
• Setting and enforcing rules: HOAs can set rules that accomplish a level of uniformity in pursuit of keeping property values up. This helps to prevent the actions of others from damaging the neighborhood's property values.
• Community interaction: Neighbor interaction can sometimes be limited, particularly in modern, tech-driven commuter communities. HOAs help neighbors get to know each other and often facilitate hyperlocal events like block parties.
• Dispute settlement: If neighbors have an issue, the HOA may be able to resolve it.

• Fees, dues and assessments: No one likes paying another monthly fee for a property they already own or unpredictable assessments that may arise.
• Restrictions and regulations: Some homeowners don’t like to be restricted on what they can do with their property.
• Inefficient operation: If an HOA isn’t well-organized, a simple variance could take months of effort and paperwork to obtain.
• Poor conduct: There is always the concern of an HOA being run ineptly or unprofessionally.

The primary purpose of a homeowners association is to organize, create and enforce the by-laws and rules for the community. These are community regulations and standards designed to maintain the community's property values and provide community members with an optimal quality of life.

No one wants to see their property values fall. While the property itself is the primary driver of its value, the neighborhood and nearby comparable homes also help determine a home’s value on the market.

Another reason HOAs exist is to enhance the quality of life in the communities they serve. This can come in several forms, including:

1. Organizing community events: HOAs help drive a sense of community through common activities. These can range from family-focused Friday night movies in the shared areas, to block parties, holiday parades and celebrations.
2. Maintaining and improving amenities: If your HOA has a pool, fitness center or clubhouse, they all must be cleaned, serviced and maintained. The HOA doesn’t just collect the money for this. It has to schedule the cleaning team, call for service when things are broken and schedule preventative maintenance.
3. Securing and Coordinating Services: Landscapers, pest control and trashmen don’t just appear. In some HOAs, these services are part of the monthly fees, and it’s up to the HOA to find an affordable and reliable provider. The HOA will also periodically review the services and seek out alternatives in order to keep fees affordable.

At the heart of HOAs are the homeowners themselves. They are the ones who make up the board and the committees, and they ultimately have the final say on how the association conducts itself. The best way to think of most homeowners associations is that the board is the overarching governance, while committees may be set up underneath the board to help with specific tasks.

The board is responsible for establishing HOA rules and regulations and managing the community budget and finances. It creates policies and procedures, and may engage with and hire a professional management group to assist with day-to-day operations. After all, the board members are volunteers who have jobs and families, and serving the community can be a weighty undertaking on top of that.

Underneath the board, HOA committees focus on specific aspects of the community and its operation. These committees can help encourage participation from owners who aren’t on the board while also taking advantage of specialized skills. They generally include, but aren’t limited to:

• Architectural Review Committee
• Communications and Social Media Committee
• Enforcement Committee
• Events Committee
• Finance Committee
• Landscaping Committee
• Safety Committee

Many HOAs will focus on involving owners with unique skills in committees. For example, encouraging a marketing professional to be part of the communication committee or a CPA to be on the finance committee.

Community membership is defined in the homeowners association by-laws, but in general it is restricted to households that are located in the community. In HOAs where rental units exist, the renters don’t get the vote – that is reserved for the landlord. In order to prevent landlords from dominating elections and decision-making, many communities limit property owners to one or two votes, regardless of how many properties they own within the HOA. This will be spelled out in the by-laws or rules.

The calculation and schedule of dues should be provided in the by-laws of each association. These are generally not set amounts and may fluctuate from year to year. The U.S. Census Bureau noted, in the 2021 American Housing Survey, that the national average monthly fees for HOAs were $191. However, most Americans paid between $200 and $300 per month.

Fees can cover a wide range of items that will be spelled out in the community rules and by-laws so that they will be clear from the start. Commonly, these include:

• Landscaping
• Cleaning and trash removal
• Parking lot maintenance
• Snow removal
• Security
• Maintenance of community amenities
• Utilities of common areas

A certain portion of fees also goes into the association's reserve fund. This fund is separate from the regular operating fund and is meant to address expenses that are not a recurring monthly cost. The reserve fund could be used when issues or new projects come up, such as powerwashing community buildings, replacing a treadmill in the fitness center or completing a renovation to existing amenities.
It’s important to note that property taxes are not included in HOA dues and are the responsibility of each individual owner.

While fees and dues cover predictable costs spelled out in the community budget, other unexpected or significant expenses can come up. These could be major repairs or renovations to common areas, legal defense or other one-time costs. 

In the event that these are not covered completely by the reserve fund, a special assessment may be called for to cover the extra cost. In general, the board will call a meeting to discuss special assessments before they are implemented, giving them the opportunity to explain the decision and listen to feedback from homeowners.

Generally, HOA voting processes have to meet the state’s requirements for non-profit corporations. Some states have separate and distinct laws for HOAs themselves. 

HOA elections take place annually. The HOA will commonly meet outside of that on a monthly basis, having both open and executive meetings. Open meetings are public and have public records where minutes are taken and made available to the community.

Much of the responsibilities of an HOA fall into one of the four buckets below. These rules and regulations are part of almost every HOA, though the degree to which they are dictated and enforced can vary.

A major focus of most communities is ensuring a level of uniformity from one house to the other. Architectural guidelines govern what is and is not allowed when altering a home's exterior. 

This could cover everything from the height and type of fencing allowed to color choices for a home's exterior, the shutters and even the doors. These can range from general to specific. One HOA might say, “No neon-painted mailboxes” while another may say, “Your mailbox must be tan and plastic, with a green post set back one foot from the curb, standing between 3 and 4 feet high.” The HOA will also have a process to request a variance to these rules.

Interior alterations are not governed by HOAs, as they would not be enforceable. An interior alteration visible from the outside may have guidelines applied. For example, the color of the front door or the displaying of flags, signs and posters in windows. 

Landscaping and the outward appearance of homes is a big part of maintaining the look of a neighborhood. In the case of some HOAs, this means dictating the standards and policing the homeowners and properties. In other instances the HOA will arrange for all of the work, from landscapers cutting the grass in the summers to handling snow removal in the winters. Similar to architectural guidelines, the HOA should have a process in place to request a variance.

Many HOA communities feature an array of community amenities, from designated pet areas to swimming pools and clubhouses. These amenities are often a big part of the draw for people interested in buying a home. HOAs set the usage policies for these amenities, including scheduling hours of operation and setting up reservation processes. They will also schedule maintenance and repairs to ensure the amenities stay in service and can be enjoyed by the community.

Generally relating to conduct within the communities, these can cover everything from on-street parking rules to pet policies that restrict the type or quantity of pets. They can also apply to noise restrictions at certain times of day. In recent years, many HOAs have implemented rules restricting or banning short-term rentals. This helps to maintain a certain level of investment in the community by keeping owners and long-term renters in place.

When it comes to enforcing these rules and regulations, homeowners associations generally follow a three-step process when it comes to noticed violations.

1. Warning Notice: The HOA issues a warning notice, specifying the violation and usually providing evidence of the violation. A photo and details of the rule that is being violated are usually part of this. The notice will provide a time frame for correction and the consequences of failing to meet that request within the specified time frame.
2. Fines: If the homeowner fails to correct a violation within the time frame, the community may fine them. In many cases, these fines accumulate daily until the violation is corrected. Even a small violation with what seems like a negligible fine can balloon into a costly issue if it isn’t addressed quickly.
3. Legal Action: If the homeowner refuses to pay fines and allows for them to accrue, the HOA may be empowered to take legal action. This could include placing a lien against the property, initiating foreclosure or court proceedings.

HOA communities are public entities, so their information is publicly available. They must file this information with governing agencies to keep their non-profit corporate status.

The best way to find information about local HOAs is through a real estate agent who is an area expert. They’ll be familiar with the communities in your area and should be able to connect you with HOA board members. As you consider moving into a community, speak with current board members and residents to gauge their satisfaction with the HOA’s communication and performance.

Here are some questions to ask before joining an HOA:

• Is membership voluntary or mandatory? While rare, there are some voluntary HOAs out there.
• May I have a copy of the by-laws and CC&Rs? You’ll want to review them thoroughly before you go to closing.
• What services do the fees cover?
• How often has the HOA increased fees in the past?
• Does the HOA have a reserve fund? If so, how much is in it? Has it been reviewed by an outside auditor?
• When was the last time the HOA charged a special assessment? How often does it charge them?

One of the primary things to remember about being in an HOA is that you have rights and responsibilities that are spelled out in the community’s governing documents. These documents also offer the ability for change and evolution, as well as guidelines for the resolution of concerns that may come up. As a community member, you also have the ability to participate in decisions and direct your HOA. Your input can make living in an HOA the best experience possible, both for you and your neighbors.