The Basics of HOAs Explained

If you are shopping for a home, there is a good chance you will be looking at options that involve a homeowners association, or HOA. HOAs enforce the rules in place in residential communities — which can address everything from paint colors to pet policies to where visitors are permitted to park — and they have become the norm in today’s communities.

In 2021, for example, 82 percent of the new homes sold were in HOAs. In 2022, the number increased to 84 percent. And in states where they are most popular, close to half of homes are governed by HOAs.

“HOAs can help to protect the value of a home, but they can also restrict what the homeowner can do with their property,” explains Realtor Pam Butera. “Before settling in an HOA, however, home buyers should make sure they understand the rules they will be expected to follow as well as the fees they will be charged for being a member.”

Butera is a distinguished Realtor with Keller Williams who has served home buyers in the Greater Philadelphia and Jersey Shore areas for more than 30 years. She and her team consistently achieve annual sales of $30 million.

Butera is also the owner of Greater Philly Cyberbacker, which provides world-class virtual administrative support services for businesses in a wide range of industries. Cyberbackers are an innovative and cost-effective solution for business leaders overwhelmed by daily administrative tasks. They can handle a host of tasks, including appointment scheduling, data entry, social media management, and invoicing and billing.

HOAs: rules and fees

When you purchase a home in a community governed by an HOA, you agree to follow a collection of rules. Often referred to as covenants, conditions, and restrictions, the rules vary from community to community, but generally seek to achieve a level of quality and uniformity for the community’s homes.

Common issues addressed by HOA rules include the colors homes can be painted, the type of roofing materials that can be used, and what type of fences can be erected on properties. HOA rules also typically address the work that must be done to maintain landscaping and where vehicles, including RVs and trailers, are permitted.

“The specifics of HOA covenants can vary widely, which is why it is important that homebuyers carefully review HOA documents as part of their search process,” Butera advises. “In some cases, HOA rules can define not only how you must maintain your home but also how you can use it. For example, some communities limit the number of house guests owners can have and even the age of those guests. Doing your HOA homework on the front end will help you to avoid unpleasant surprises after you move in.”

In addition to imposing rules on homeowners, HOAs also charge fees that are used to cover administrative costs and the upkeep of common areas such as clubhouses and pools. These fees can vary widely.

“Identifying HOA fees and determining how they impact the affordability of a home is a critical part of the home buying process,” Butera says. “In communities where amenities are limited, fees can be as low as $20 per month. But some communities charge hundreds of dollars per month.”

Butera also advises that potential buyers explore the rules that address the degree to which HOAs can increase their fees. “Most HOA documents allow for slight increases every year, in the neighborhood of 3 percent to 5 percent, but in a lot of cases the HOA board can approve higher increases to cover rising expenses,” she says.

HOAs: rule enforcement

When community rules are violated, HOAs step in to hold homeowners accountable. In many cases, the first step is a notice from the HOA board or the company hired to manage the community. If notices are ignored, the HOA can issue fines. Some HOA covenants allow for communities to sue homeowners or place liens on their properties if issues are not addressed.

“When neighbors decide they want to bend or break community rules, having an HOA to step in and hold people accountable can be valuable,” Butera says. “It protects homeowners who purchase a home with the expectation that a certain level of quality will be maintained in the community.”

HOAs: pros and cons

While HOAs have become the norm, especially in recently established communities, they are not the only option. Homebuyers should carefully weigh the pros and cons before committing to abide by the rules of an HOA.

“Take the time to know what you are getting yourself into,” Butera warns. “HOAs generally deliver a more peaceful and well-kept community, but they can also be expensive and aggressive about enforcing the rules. Talking through the specifics with a realtor, board member, or resident should be a high priority if you are considering buying in a community with an HOA.”