homebuyersCondominiums, townhouses, and other homes in designated communities can be attractive prospects to potential buyers.

However, if you purchase one of these properties, you'll be required to join the homeowners' association (HOA) that manages the community. These associations may place limitations on what you can and cannot do with your new home.

So it's vital that you know how homeowners' associations work and what is expected of you as a member before you buy.

What to Consider Before Purchasing a Home With a Homeowners’ Association

Most HOAs have an elected board, and each homeowner in the community has a right to vote as a member of the association. Although HOAs operate differently, each one has governing documents that set forth rules for all homeowners to follow.

Community associations also have the right to collect fees for the upkeep of communal areas.

You should examine the requirements of the HOA carefully to determine if what you gain with this governance is worth what you'll be expected to give up. For example, you should take a look at the association’s:

  • Fees. The first thing you should know is HOA fees (also called assessments or dues) can add a significant amount to your monthly housing budget. Fees are typically a few to several hundred dollars per month, depending on the location and the amenities offered. If there's a major expense, such as installing a new pool, the association may divide the cost between homeowners as an extra assessment. Fees are also used for day-to-day costs, such as maintenance, landscaping, or private security.
  • Amenities. Unlike other properties, HOAs give members direct control over the neighborhood in which they live. If the homeowners want a park on the property, they can raise the issue at an HOA meeting and vote to spend their community funds on the project. Association fees allow members to take an active interest in the community, and the funds invested in amenities typically raise property values for the owners.
  • Rules. The rules set forth by an HOA that all residents must follow are called covenants, conditions, and restrictions (CCR). These regulations vary widely depending on the association, and can include:
  • which paint colors may be used on the exterior of your home
  • the changes you may make to your yard
  • the kinds of vehicles you can park on your property

If you want to do something forbidden by these rules, you have to ask the HOA to grant you a variance. You should get a current copy of the HOAs regulations from your real estate agent, especially if you have pets, plan to improve the home, or wish to rent out your property. You should also understand the rules for nonpayment of HOA dues or fines for infractions, as the HOA may retain the right to foreclose on your property.

  • Management. Every HOA should have a set of bylaws that explain board structure, schedule of regular meetings, voting rights of members, and the length of board member terms. Tightly-managed HOAs may have strict rules on board member elections and responsibilities, while others require each owner to take turns serving in a leadership role. Examine these closely to make sure you're willing to comply with all bylaws.
  • Budget and reserve fund. In addition to its operating budget, HOAs may have a reserve fund to make larger improvements. If there's not much money in the fund, there's a higher likelihood that any additional expenses will be passed onto the residents. As a potential buyer, you have the right to request a list of special assessments over the past few years to get an idea of how often the HOA overspends its reserve fund. A property with an HOA that's not financially solvent isn't an optimal choice for homeowners.
  • Meetings and minutes. See if the HOA will give you a copy of a recent meeting’s minutes or better yet, let you sit in on an HOA meeting. This gives you an idea of the conflicts that typically arise and how they're resolved, and how owners can change or add rules if they wish to do so.

If you're considering buying a home, our experienced real estate attorneys can answer your questions and help you make buying decisions with confidence. Simply fill out the quick contact form on this page to set up a consultation.