# Understanding Homeowners Associations (HOAs): Rules, Fees, and Benefits

## What Is a Homeowners Association (HOA)?

Homeowners Associations (HOAs) play a crucial role in managing the rules and maintenance of properties within subdivisions, planned communities, and condo buildings. Each homeowner within an HOA jurisdiction becomes a member, binding them to its rules and fees. Typically managed by a board of directors, HOAs may restrict members' property usage, yet also offer community benefits, from amenities like pools and tennis courts to organized maintenance and landscaping.  

### Key Takeaways

*   A homeowners association (HOA) is an organization that governs a community's common areas and enforces property rules, funded by member fees.
*   HOAs require membership from homeowners within their jurisdiction, often mandating compliance with regulations outlined in the Declaration of Covenants, Conditions, and Restrictions (CC&Rs).
*   HOA fees, ranging from $200 to $400 monthly, support maintenance, amenities, and reserve funds, and can include special assessments for unexpected expenses.
*   Prospective buyers may be deterred by HOA fees and strict regulations, while proponents argue that HOAs help maintain property values and community standards.
*   An HOA's board, often composed of community residents, enforces rules and manages finances, holding legal authority to impose fines and litigate as necessary.

![Homeowners Association](https://www.investopedia.com/thmb/F7dSUjqOuHrxNg8pWv_loTivLU0=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/hoa_definition_final_0831-cbe453e1394645a4aef8e856cba48d60.jpg)

*— Sydney Saporito / Investopedia*

## Understanding the Functioning of Homeowners Associations

Homeowners associations (HOAs) are usually formed within communities or neighborhoods of single-family homes or multiple-unit buildings such as townhomes or condominiums. HOAs are formed to create and enforce [property](https://www.investopedia.com/terms/p/property.asp) rules within their jurisdiction.

Community residents make up and run HOAs. Buying a home in an HOA community usually requires membership.

An HOA usually has a board of directors or governors. These groups are elected to enforce and oversee the HOA’s rules and regulations. An HOA typically describes its rules as [restrictive covenants](https://www.investopedia.com/terms/r/restrictive-covenant.asp) in a document called a Declaration of Covenants, Conditions, and Restrictions (CC&Rs).

CC&Rs set rules for property maintenance. These sometimes include structural restrictions such as the type of fences or landscape allowed. They may also include more minor aesthetic choices like the color of paint on a house.

CC&Rs may list penalties for guideline violations. Penalties may include [fees](https://www.investopedia.com/terms/f/fee.asp), required compliance, or even litigation.  

## Exploring HOA Fees and Their Impact 

Some HOAs can wield significant financial and legal power over the property owners in their zone. HOAs collect monthly or annual [HOA fees](https://www.investopedia.com/terms/h/homeowners-association-fee-hoa.asp) that depend on several factors:

*   Type of property
*   Number of properties in the group
*   Location
*   Amenities offered
*   Operating expenses

Fees typically range from $200 to $400 monthly but can vary from under $100 to over $10,000 in luxury areas.

HOA fees often go into a reserve fund for major renovations or emergencies. In addition to regular fees, HOAs can also impose special assessments on homeowners when the association lacks sufficient reserves to pay for unexpected repairs on common areas such as sidewalks or parking lots.

The HOA’s board is usually responsible for the organization’s finances and it oversees the collection and management of funds. The board can fine homeowners for breaking rules or damaging common areas. HOAs may place a [lien](https://www.investopedia.com/terms/l/lien.asp) on a home if dues are overdue.  

> **Important**
>
> Existing HOA liens can hinder home sales until cleared.

## Comparing HOAs with Community and Property Owner Associations

Most HOAs are [incorporated](https://www.investopedia.com/terms/i/incorporate.asp) so they're subject to state laws. Some states consider condominium-based HOAs (often called condominium communities) and organizations governing cooperatives (called co-op boards) to be distinct entities from HOAs, however.

This distinction is made on the assumption that the property interests of these organizations differ. The designation community association serves as a broader, umbrella term as a result. It encompasses HOAs, condominium communities, and co-op boards.

An HOA differs from a property owners' association that aims to improve community and property values. Unlike HOAs, property owners' associations can include anyone interested in property values, even non-homeowners.

### 365,000

The number of HOAs in the United States as of 2023, according to the Foundation for Community Association Research. That number is expected to increase by 3,000 in 2024. About 75.5 million Americans reside in a community association neighborhood or property.

## Weighing the Pros and Cons of Homeowners Associations 

### Advantages

HOAs set regulations and guidelines for their members. These standards are upheld to preserve and enhance the community’s [property values](https://www.investopedia.com/articles/mortgages-real-estate/08/interest-rates-affect-property-values.asp).

Guidelines often focus on property appearance, cleanliness, condition, and repairs. The guidelines for HOAs are usually designed to help ensure a uniform appearance for all the properties included in the association’s zone.

The HOA management will typically provide additional services for its members in exchange for their HOA fees. These amenities are available to all HOA members and may include:

*   Landscaping
*   Parking lots
*   Swimming pools
*   Tennis courts
*   Party spaces
*   Snow removal

Certain [utilities](https://www.investopedia.com/terms/u/utilities_sector.asp) and trash collection may be covered by HOA fees.

For some, HOAs symbolize self-governance and democracy. This belief may stem from the idea that the best people to manage a community are those who live in it rather than a landlord who doesn’t reside on the premises.

### Disadvantages

One disadvantage of an HOA is the high cost of the association fees. This can act as a deterrent for some prospective buyers. The HOA rules and regulations can also seem unreasonable, arbitrary, or too restrictive for some homeowners who may want the freedom to customize their properties.

HOA board members are usually volunteers and may not be trained in [real estate](https://www.investopedia.com/terms/r/realestate.asp), finance, or group leadership. HOA leaders must agree on maintenance and upgrades, which can cause member conflicts.

Pros

*   Set and enforce community rules
    
*   Protect property values
    
*   Provide services, amenities, and facilities
    
*   Offer self-governance
    

Cons

*   Impose fees, dues, and assessments
    
*   Maintain restrictive regulations
    
*   Operate inefficiently
    
*   May be run amateurishly or ineptly
    

## Real-World Example: Navigating HOA Challenges 

Individual homeowners may conflict with their HOAs. One thorny issue in particular relates to the installation of solar panels. HOA boards often don’t like them, fearing that they hurt property values. They’re allowed to forbid homeowners from adding them to their residences in 23 states.

An electrical engineer residing in Blaine, Minnesota applied for permission to add [solar panels](https://www.investopedia.com/articles/mortgages-real-estate/10/solar-power-home.asp) to their house in 2020. The HOA rejected their proposal in October of that year, citing aesthetic concerns because the panels were too visible from the street. The HOA also cited the lack of established guidelines for rooftop solar in the association’s bylaws.

The electrical engineer joined a group of homeowners and solar advocates asking Minnesota lawmakers to support a bill that would allow homeowners associations to regulate but not ban the installation of solar thermal panels on single-family homes. Introduced in the Minnesota House of Representatives in early 2021, it was one of a series of similar bills proposed that never passed.  

## What Does a Homeowners Association (HOA) Cover?

A homeowners association (HOA) is an organization tasked with governing the affairs of a real estate development owned by multiple parties such as an apartment building. HOAs are responsible for tasks such as ensuring building maintenance, deciding on whether to pursue larger renovation projects, and drafting and enforcing the building’s bylaws.

HOAs charge their members monthly fees to fund their operations, typically in the range of $200 to $400 per month. They also have the authority to enforce the community’s bylaws such as by imposing fines on residents who refuse to comply.

## What Are the Pros and Cons of Belonging to an HOA?

HOAs can benefit individual owners by providing necessary management services. Without an HOA, the owners of an apartment building would have to coordinate among themselves to decide on common problems such as building-wide garbage removal, building repairs, and community policies. This could be very time-consuming for residents and could result in conflicts and disagreements between owners.

HOAs can also create problems for owners, however, to the extent that an owner disagrees with the HOA’s community bylaws or spending decisions.

## What Legal Powers Does an HOA Have?

Individual HOAs have varying levels of legal powers depending on how they were designed. They generally have the legal authority to create and enforce community policies, however, such as whether to allow smoking, pets, or rentals in the building.

HOAs also decide on budgets for the building and have the authority to charge monthly or one-time fees to their members. HOAs can impose a range of penalties if a member refuses to pay these fees or to comply with community policies. These penalties can include monetary fines, the restriction of community privileges, and even litigation in many cases.

## The Bottom Line

Homeowners associations (HOAs) provide structure and governance for community living by enforcing rules and maintaining common areas, promoting an organized and cohesive neighborhood environment. While HOAs can enhance property values and ease the burden of home maintenance through collected fees, they may also impose restrictions that limit homeowners' freedoms regarding property use and modification. It's essential to weigh the advantages of shared amenities and property value protection against the potential drawbacks of reduced autonomy when considering a property within an HOA.

> **Article Sources**
>
> 1.  Foundation for Community Association Research. “[The Community Association Fact Book 2020](https://foundation.caionline.org/wp-content/uploads/2021/07/FB_Narrative_2020.pdf).” Page 14 (Page 16 of PDF)
>     
> 2.  Foundation for Community Association Research. “[Statistical Review: Summary of Key Association Data and Information](https://foundation.caionline.org/publications/factbook/statistical-review/).”
>     
> 3.  National Association of REALTORS. "[Study: Homeowners Associations Are Booming](https://www.nar.realtor/magazine/real-estate-news/study-homeowners-associations-are-booming)."
>     
> 4.  Energy News Network. “[Homeowners Associations Still a Barrier for Some Would-Be Solar Customers](https://energynews.us/2021/02/11/homeowners-associations-still-a-barrier-for-some-would-be-solar-customers/).”
>     
> 5.  Minnesota Legislature, Office of the Revisor of Statutes. “[HF 257](https://www.revisor.mn.gov/bills/text.php?number=HF257&type=bill&version=0&session=ls92&session_year=2021&session_number=0).”