Homeowner Associations (aka: HOAs) - The good, the bad, and the fine print

Dated: July 21 2021

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Homeowner associations

Purchasing a home with an HOA has special considerations; engage an experienced Realtor to help.

With historically low home inventory and single family homes in high-demand, many first time home buyers are giving up on finding a single family home and are now considering the purchase of a condo or townhome. With this pivot, home buyers suddenly find themselves dealing with the new (and often confusing) world of the Homeowners Association, or HOA for short. It’s critical to understand the pros and cons of an HOA, what questions to ask, and how an HOA impacts the bottom line.

I get a lot of buyers that find the rules, the costs, and the fine print of HOAs are intimidating. But they don’t have to be, and the association can be your ‘friend!’ These are the most common questions I get about HOAs, and my guide in helping you navigate those waters.

How does having an HOA increase/decrease costs?  

If your community, condo, or townhome is managed by a homeowners association, membership will be mandatory for you. An HOA is run like any other legal association; it will have a board, rules and regulations, and mandatory meetings and reporting of financials. Of course, it takes money to run the HOA, fund projects, make repairs, and keep a certain amount of dollars in reserve. The HOA funds itself by charging the community member/homeowner monthly, quarterly, or annual dues. This is an additional monthly cost you need to factor into your budget. The flip side is that your HOA dues will often cover exterior insurance, community amenities (like a pool, tennis courts, etc.), lawn and snow service, and other items that you will no longer need to cover on your own.

When you’re buying a home, it’s important to look and see what an HOA covers. For example, many associations pay for water, sewer, and community amenities. Sometimes they pay for hazard insurance, internet service, and electricity. Having these costs covered by your HOA often balances out and even neutralizes the impact of an HOA fee on your monthly budget.

Does an HOA property impact the kind of loan you can get?

Yes. Certain types of homes are not eligible for certain types of financing. An HOA has to apply to be qualified for FHA or VA financing, and many do not qualify. It’s important to talk to your realtor, your lender, and in many cases, the association itself to ensure the mortgage for which you are preapproved is accepted by the HOA.  

Do I have to follow the rules of the HOA?  And why are those rules in place? 

Yes, if you are a member of the homeowners association, you have to follow the rules. And there could be penalties (like fines and property liens) if you don’t. In general, the HOA rules are there to help you. For example, they help regulate the noise, condition, and upkeep of the property. They may regulate pet behavior, which types of pets are allowed, parking, architecture, landscaping, decoration, and use of shared facilities and community amenities. HOA rules help to keep things running smoothly and consistently and might even keep neighbors from getting in fistfights over parking. 

What are some rules that I won‘t like? 

Some rules may seem great to some residents, but restrictive to others. Common complaints about HOA rules are pet restrictions (why can’t I have a monkey?), parking restrictions (why can’t I park my antique fire engine here?), architectural rules (why can’t I paint my house purple?), or rental rules that limit or prohibit when (and if) a homeowner can rent out their property.   

Why do I have to pay the homeowners association?  

The association has to set a budget for routine maintenance of common areas and amenities (think community green space, community pool, fitness center, community clubhouse, or even roofs). The good news is that HOA payments can help homeowners budget consistently for services like snow removal, water, trash, internet, and other services that are included in a regular monthly payment.

What should a buyer pay attention to in the HOA documents? Are there any specific questions a potential buyer should ask about the HOA?

Know on the front end what you plan on using the property for and which rules might restrict or prohibit your anticipated usage. Do you plan to (or even need to) rent out the property? Check these rules carefully. Do you plan on bringing your personal zoo with you? Make sure they will allow your pet ferret to live with you. Do you plan on having late night parties with lots of cars parked about? Make sure the rules work for you!

Is it important to know about the HOA’s master insurance policy?

Yes, it’s critical to understand the HOA’s insurance policy. Because if the association maintains a hazard insurance policy for common aspects of your home, such as a shared roof, siding, windows, decks, etc., this can save you a ton of money on your monthly payment, since you will only need an “HO6” policy, also known as a “walls-in” policy. These are cheaper, similar in cost to a rental policy for an apartment.  

In addition, you need to understand what is covered (and what is not covered) when there is a claim. For example, some associations might try to shirk responsibility for a roof claim, making the homeowner pay for things that the association holds responsibility for.

Sage advice before buying into a homeowner’s association - Know the rules before you buy!

Call me now to talk more about your new home purchase - 952-292-6623.


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Chuck Gollop

Licensed Realtor, Stand-up Comedian, and Retired Police Sergeant. I took my 25 years of law enforcement experience, threw in my experience as a stand-up comic and college teacher, and used those ideal....

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