The HOA: Get to know the basics

Chad Banken
Chad Banken
Published on February 28, 2022

A homeowners association (HOA), also known as a community management association, is a nonprofit organization that serves to:

  • foster a sense of community
  • govern rules in a particular community
  • maintain common areas of the property
  • provide services for the homeowners

If you buy a condo, townhouse or single-family home in a community managed by a homeowners association, you are required to become a member of this HOA and pay dues.

Types of Homeowners Associations

Homeowners associations typically fall into three categories:

Condominium: In a condominium, homeowners own their individual unit, but not the property boundaries or land. In addition, each resident owns a small percentage of the common area.

Cooperative: In a cooperative, a corporation owns the entire property, including the individual units. Homeowners have a shared interest in the property and exclusive rights to “rent” their individual unit. Cooperatives are rare, accounting for only 5 to 7 percent of all HOAs.

Planned community: Homeowners in a planned community own not only their individual unit, but the lot on which their property lies. The homeowners association maintains ownership of the common areas, such the grounds, roads and facilities. Planned communities are the most common type of HOA.

What to Expect from Homeowners Associations

People who own property run by a homeowners association agree to a set of covenants, conditions and restrictions (CC&R). The CC&R lays down the rules and establishes the monthly dues for all homeowners in the community. Some common restrictions in a CC&R include:

  • limits on the number of residents allowed in a single unit
  • noise ordinances
  • operating times for common areas, pools and fitness centers
  • property improvements that are allowed (painting, gardening, etc.)

The CC&R are usually reasonable, and it exists to supply all owners in the community with a pleasurable living experience. Naturally, there are those that contain unreasonable expectations, which is why you should always read all documents from the HOA before agreeing to purchase a home in the community.

Homeowners Association Advantages

Homeowners associations help maintain a pleasant community for their residents. The CC&R help regulate the appearance of properties, conduct of residents and their guests and noise levels.

Many community management associations offer amenities such as playgrounds, pools, clubhouses and gyms for their members to use. Others offer services such as landscaping and repairs.

Homeowners Association Drawbacks

An HOA exists to protect the rights of the residents in the community, but it can cause some inconveniences while doing so.

I also costs money. Homeowners association dues can be expensive. In Manhattan, NY, for instance, “Monthly maintenance fees … have soared to an average of $1.70 per square foot,” according to Robert Frank at

We’ll do the math for you: “… a 1,200 square foot condo will cost you $2,000 a month in maintenance fees, on top of your mortgage, utilities and (usually) property taxes,” Frank concludes.

Another drawback is that some HOAs are intrusive and some homeowners feel that they take away too much of the homeowners’ freedoms.

To add insult to injury, the HOA can fine homeowners who break the rules. Furthermore, if these fines aren’t paid in a timely fashion, the HOA can put a lien on the property and threaten the owner with foreclosure.

It’s regulations such as these that created the nickname “Little Governments.”

Again, read each document from the HOA thoroughly and, if needed, consult with an attorney for clarification of anything you don’t understand.

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