What Is A Homeowners Association, or HOA? Bankrate Caret RightMain Menu Mortgage Mortgages Financing a home purchase Refinancing your existing loan Finding the right lender Additional Resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Bank Banking Compare Accounts Use calculators Get advice Bank reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Credit Card Credit cards Compare by category Compare by credit needed Compare by issuer Get advice Looking for the perfect credit card? Narrow your search with CardMatch Caret RightMain Menu Loan Loans Personal Loans Student Loans Auto Loans Loan calculators Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Invest Investing Best of Brokerages and robo-advisors Learn the basics Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Home Equity Home equity Get the best rates Lender reviews Use calculators Knowledge base Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Loan Home Improvement Real estate Selling a home Buying a home Finding the right agent Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Insurance Insurance Car insurance Homeowners insurance Other insurance Company reviews Elevate your Bankrate experience Get insider access to our best financial tools and content Caret RightMain Menu Retirement Retirement Retirement plans & accounts Learn the basics Retirement calculators Additional resources Elevate your Bankrate experience Get insider access to our best financial tools and content Advertiser Disclosure
Advertiser Disclosure
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: On This Page
FStop Images/Getty Images April 04, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Ellen Chang is a former contributor for Bankrate. Chang focused her articles on mortgages, home buying and real estate. Her byline has appeared in national business publications, including CBS News, Yahoo Finance and MSN Money. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. The term HOA stands for homeowners association. A community that’s governed by an HOA can consist of individual houses, townhouses, high-rises or condos, often within a planned community. The responsibilities of the HOA can vary based on property type — for a condo development it may oversee management of the entire property, for instance, whereas for a townhouse community, it may only be in charge of common areas.
What is an HOA
An HOA, or homeowners association, is a self-governing organization in “common-interest” communities where homeowners collectively pay fees to maintain the units or neighborhood. HOAs are typically run by resident homeowners, unpaid volunteers who are elected to a board of directors that oversees the HOA’s management. Properties within an HOA are governed by a collective that are enforced by the association. Each property owner is required to pay that cover use and maintenance of common areas. These areas can include swimming pools, parks, parking lots and roads, as well as communal lawn maintenance and landscaping. If you are thinking about living in an HOA community, there will be fees to pay and rules to follow. Here’s everything you need to know about HOA life. How much are HOA fees and what do they cover
Homeowners should expect to pay anywhere from $200 to $2,500 or more per year in HOA costs and fees, or assessments. The amount depends on the amenities offered by the community. At minimum, homeowners have to pay their portion of the cost to operate the association, which can include: Landscaping and maintenance (including pest control) Garbage pickup Parking Shared utilities (e.g., in common areas) Safety and security Neighborhoods with extensive amenities usually charge considerably more than those that just enforce rules and restrictions. “I have seen assessments for single-family HOAs as low as $50 a year, and as high as $2,500 a year. The higher-assessment communities are generally tied to those with private streets and gates, and possibly personnel,” says Texas attorney Marc Markel of Roberts Markel Weinberg Butler Hailey. Markel is board-certified in real estate property owners association law. From time to time, homeowners in an HOA may also need to pay for special assessments. This is common when a natural disaster or other unanticipated problem hits and the community requires significant unbudgeted repairs. In this case, the HOA has the power to levy a special one-time fee to cover the costs, explains Jackie Boies, senior director, partner relations for Money Management International, a nonprofit debt counseling organization in Sugar Land, Texas. “Following a hurricane, a friend of mine was shocked to learn she would be assessed an additional $1,000 for rebuilding a fence around the entire community, which was not included, insured or part of the general HOA contract,” Boies says. Pros and cons of HOA life
Some homeowners love living in an HOA community. Others may find the rules to be too restrictive and cumbersome. Here’s a list of pros and cons to help you decide. Pros
Your neighborhood will be neat and well-maintained, with minimal effort on your end. Your property value will likely benefit from more stability due to rules governing the maintenance and appearance of homes. You might gain access to exclusive amenities like a swimming pool, playground, clubhouse, gym or on-site security. You may also have opportunities to meet and socialize with your neighbors through HOA-sponsored events. An HOA board will hear and mediate disputes between neighbors for property-related issues that violate the rules (for example, barking dogs, trashed yards or fence disputes). Cons
HOAs typically have a lot of power over how you can maintain and live in your home. You might be limited to certain design schemes or paint colors, or even the number of and type of pets you are permitted to have. HOA fees can stretch your monthly housing budget, especially if home prices are already steep in your area. Some HOAs can be aggressive about sending violation notices for the slightest infractions. A note about HOA rules
While , some are far more restrictive than others. For example, many will require you to get prior approval for home additions or a new roof. Others might prohibit you from renting out your home. Some HOAs may even restrict the number of plants you can have in your front yard, or the height of mailboxes or playground equipment. In the most extreme cases, a homeowner can be fined or have a lien put on their home for repeatedly failing to comply with rules or . Questions to ask before buying in an HOA community
Here are a few of the top questions potential homebuyers have about HOA living. Make sure you know the answers before buying, so you don’t run into any unpleasant surprises once you move in. What are the rules and bylaws
Before you make an offer on a home, ask your real estate agent to request a copy of the HOA’s bylaws and its Covenants, Conditions and Restrictions. This document, often shortened to CC&R, outlines the community’s rules. You might also be able to find this information online. Read it thoroughly so you can determine whether you can live with the HOA’s rules. How is the HOA run
Typically, HOAs are operated by a board consisting of volunteer homeowners who reside in the community. It’s important to have a sense of how receptive those in charge are when issues crop up. If the HOA has an upcoming meeting, it might be worth attending to get a feel for how things are run. You may also want to do some internet sleuthing to find out just how hands-on the HOA board really is. Check online community groups to see if people have posted about their experience with the HOA. Some also have online reviews on Google Reviews or Yelp. Keep in mind that serving on the HOA board isn’t a commitment many are willing to take on, so the same board members often continue to get reelected. This can create conflict if the board and newer residents disagree on an issue. Some HOAs are run by a real estate developer or property manager. Typically, the developer maintains control until a certain amount of units are sold. If the development is fairly new, find out whether a board has been established yet. What is the HOA s financial situation
Inspecting the financials of an HOA is an important step. Check how often annual assessments are raised, and by how much. Look to see if the HOA has a sufficient reserve fund and insurance to make repairs if, say, a hurricane blows off the clubhouse roof or flooding damages the landscaping. Also, find out if any debt has accrued and whether the HOA has ever had legal judgments against it. Ask about any recent engineering assessments, too, which can give you clues as to what repairs might be in store in the future and how much the repairs are expected to cost. “If you’re looking to buy a home in a HOA, be sure to ask for a copy of its financial statements,” says Jeffrey Ducker, a principal in the audit department at MBAF, a Florida public accounting firm. “Look at what its liquidity is, if it has sufficient working capital to operate and if it has set aside reserves for future major repairs and replacements. If it doesn’t have reserves, that would be considered a negative factor.” What amenities does the community have
To fully understand what your HOA assessments are paying for, find out what’s included. For example, does the money cover trash pickup and landscaping of shared areas? A pool or clubhouse? Twenty-four hour security? What rules or restrictions are in place for using those amenities? It’s also good to ask about whether the HOA has any significant projects in the works that may impact the community or the monthly assessments you pay. Is the community expanding its amenities? How will that project be funded? Knowing the answers to such questions and whether the projects will impact HOA assessments can help you budget for increased costs in the years ahead. Bottom line
Living in an HOA community comes with some trade-offs. On one hand, you get the benefit of a well-maintained neighborhood that might have more amenities than a community without an HOA. On the flip side, you’ll have the added monthly expenses, and you might not get as much leeway to maintain your home as you’d like. Weigh the pros and cons carefully, along with the costs, to determine whether it’s right for you. Learn more
SHARE: Ellen Chang is a former contributor for Bankrate. Chang focused her articles on mortgages, home buying and real estate. Her byline has appeared in national business publications, including CBS News, Yahoo Finance and MSN Money. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Jeffrey L. Beal, president of Real Estate Solutions, has 40 years' experience in multiple phases of the real estate industry. Related Articles