Understanding HOAs: An Overview
When purchasing a home in a Homeowners Association (HOA), you’re not just buying property—you’re also becoming part of a managed community with shared rules, responsibilities, and benefits.
HOAs are common in many U.S. neighborhoods, particularly in planned communities, condominiums, and townhomes.
While they offer structure and amenities, they also come with fees and regulations that homeowners must understand before making a purchase.
5 Key Aspects to Consider Before Buying into an HOA
1. HOA Fees and Assessments
One of the primary financial commitments in an HOA is the monthly, quarterly, or annual fee. These dues cover common area maintenance, landscaping, security, and amenities like pools, gyms, or clubhouses.
Some HOAs also impose special assessments—extra fees required to fund major repairs or unexpected expenses. Before buying, review the fee structure, history of increases, and potential for future assessments.
2. Rules and Restrictions
HOAs enforce a set of Covenants, Conditions, and Restrictions (CC&Rs) that govern what homeowners can and cannot do with their property. These rules can cover:
- Exterior modifications (paint colors, landscaping, additions)
- Parking restrictions (number of vehicles, types of vehicles allowed)
- Pet policies (size limits, breed restrictions)
- Short-term rentals (Airbnb and VRBO limitations)
- Noise and nuisance rules
Make sure the HOA’s rules align with your lifestyle before committing to the purchase.
3. Amenities and Services
HOAs often provide shared amenities such as pools, fitness centers, playgrounds, and community events.
These features can enhance quality of life and add property value, but they come at a cost. Consider whether you’ll use the amenities you’re paying for.
4. HOA Governance and Management
HOAs are typically governed by a board of directors, made up of homeowners who oversee financial decisions, rule enforcement, and maintenance projects.
Some HOAs are self-managed, while others hire professional management companies.
Reviewing meeting minutes and budgets can provide insight into how well the community is managed.
Recommended Reading: How Do I Find CC&R’s For My Property?
5. Financial Health of the HOA
A well-funded reserve account is crucial for covering major repairs without excessive special assessments. If you do not receive an information certificate with this information, ask for:
- The latest financial statements
- The reserve fund balance
- Any history of special assessments
- Details on outstanding debts or legal disputes
A financially stable HOA protects homeowners from unexpected costs and ensures long-term property value.
Benefits and Drawbacks
Benefits of Living in an HOA
- Community Maintenance – Common areas and landscaping are well-kept.
- Amenities & Shared Services – Access to pools, parks, and other features.
- Property Value Protection – Rules help maintain uniformity and curb appeal.
- Conflict Resolution – Disputes between neighbors can be managed by the HOA.
Potential Drawbacks of an HOA
- Fees & Assessments – Monthly dues and unexpected assessments can be costly.
- Rules & Restrictions – Some HOAs impose strict regulations that limit homeowner freedom.
- Governance Issues – Poor management or board conflicts can create financial and operational problems.
- Legal Risks – Lawsuits between homeowners and the HOA can impact property values.
Recommended Reading: Pros & Cons of HOAs
Final Thoughts
Buying into an HOA community offers structure, amenities, and maintenance benefits, but it also comes with rules and financial obligations.
Before purchasing, carefully review the HOA documents, financials, and restrictions to ensure they align with your lifestyle and budget.
A well-run HOA can be an asset, but a poorly managed one can led to frustration and financial strain.
By doing your due diligence, you can make an informed decision and enjoy the benefits of a well-maintained community.
How can Eli help?
Looking at buying into an HOA? Eli Report uses artificial intelligence to provide an intelligent snapshot of HOA documentation in a matter of minutes.
The report summarizes common restrictions, highlights key issues from the AGM and board minutes, and analyzes the financials & budget of the HOA.
Eli Reports help Realtors work more efficiently, enabling them to better inform their clients during a transaction.
Request an Eli Report from your real estate professional today!
If you are a Realtor or Owner, click here to sign up for an account and run an Eli Report for free. Begin analyzing HOA documents in minutes.