Definition:
A Homeowners’ Association (HOA) is an organization that manages a residential community, enforcing rules and maintaining shared spaces. Homeowners in the community pay regular fees to support the HOA’s services.
Example:
Mark buys a condo in a gated neighborhood. The community has an HOA that maintains the landscaping, swimming pool, and clubhouse. Mark pays $250 each month in HOA dues and must follow community rules, like no parking on the grass or painting his front door unusual colors.
Explanation:
An HOA is common in condominiums, townhome complexes, and planned neighborhoods. When someone buys a property in an HOA-managed community, they automatically become a member and agree to follow its rules, called Covenants, Conditions & Restrictions (CC&Rs).
HOA responsibilities can include:
- Maintaining shared spaces like parks, sidewalks, or pools
- Enforcing community rules (such as limits on exterior changes or noise levels)
- Managing budgets and collecting monthly or annual dues
- Overseeing repairs and insurance for common areas
HOA fees vary based on the amenities and services provided. Some HOAs also charge special assessments if unexpected costs arise.
Before buying in an HOA community, it’s important to review the HOA’s rules, fees, and financial health. Some HOAs are well-run, while others may have strict rules or financial issues that affect property values.
Why is Homeowners’ Association Important in Real Estate Transactions?
An HOA affects a buyer’s monthly costs, lifestyle, and property rights. For buyers, understanding the HOA’s rules and fees helps avoid surprises and ensures the community fits their needs. For sellers, disclosing HOA details is required and can influence how quickly a home sells. Knowing the role of the HOA helps both parties make informed, confident decisions.