A homeowners association (HOA) is an organization made up of the owners in a planned community, condominium or townhouse development. It maintains the shared property, such as roads, pools, landscaping or a building’s roof, and enforces rules that keep the community consistent. Owners pay dues to fund it and elect a board to run it.
Condo buildings usually call theirs a condominium association, and some large communities have a master association above several smaller ones, but the idea is the same.
How an HOA is set up
- Governing documents. The declaration of covenants, conditions and restrictions (CC&Rs) is recorded against every property and sets the core rules. Bylaws explain how the association is run, and rules and regulations cover day to day matters.
- The board. Volunteer owners elected by the members make decisions, adopt the budget and hire vendors or a community manager.
- Members. Every owner is a member, with voting rights set by the documents.
- State law. Most states have statutes covering HOAs or condos, including records access, meetings, assessments and collections.
What HOAs typically do
- Maintain common areas and amenities
- Insure shared property, and in condos often the building itself
- Collect dues and special assessments
- Keep reserve funds for big future repairs
- Approve exterior changes such as paint colors, fences or additions
- Enforce rules on parking, noise, pets, trash and rentals
Example
A hypothetical 120 home community has an annual budget of $216,000 for landscaping, a pool, insurance, management and a reserve contribution. Split evenly, that is $1,800 a year per home, or $150 a month. When the pool needs a $96,000 resurfacing and the reserves can cover only $48,000, the board may levy a special assessment for the rest: $400 per home.
What it means for landlords
If you rent out a home in an HOA, you answer to two sets of rules: landlord-tenant law and the association’s documents. Before buying, read the CC&Rs for leasing limits, look at the budget and reserve study, and ask about pending assessments or lawsuits. Once you rent, give the tenant the community rules, keep dues current and decide in the lease who pays fines the tenant causes.
Why it matters
HOAs can protect property values and take exterior work off an owner’s hands, but they add a cost and a layer of control. For owners, dues are a fixed monthly expense to plan for. For community managers and self managed boards, TenantLoop has an associations mode with homeowner accounts, dues, violations with notices and fines, and board members who see the association’s reports.
Related terms
In practice. How the term shows up day to day.
Is joining the HOA optional?
Usually not. If a property is in an HOA, membership and dues come with ownership because the covenants are recorded against the property and bind each new owner.
Can an HOA stop me from renting my home?
It may be able to limit renting, depending on its recorded documents and state law. Common limits include minimum lease terms, caps on rented homes and registration of tenants.
Can tenants be fined by the HOA?
The association usually fines the owner, who may pass the cost to the tenant if the lease allows it. Tenants should receive a copy of the rules they must follow.