The 4 Critical Components of Homeowners Associations (HOAs)

Amenities, such as community rooms and swimming pools, often create higher dues. Yiquan Zhang/Unsplash

Dear Monty: We are considering buying a home in a homeowners association. The agent calls it an HOA. We have heard both positive and negative reviews about the concept. Are homeowners associations a good idea?

Monty’s Answer: There are many homeowners associations. Estimates vary, but the U.S. Census Bureau has published data on the number of HOAs since 2009. According to Wikipedia, developers created the Arroyo Seco Improvement Association in California in 1905. Developers built many more between 1905 and 2009. I suspect there are about 350,000 HOAs in the United States. They are prevalent, and for the most part, a good idea. The key is matching an HOA with your lifestyle.

Benefits and Obligations

Legal documents create HOAs that establish the rules and responsibilities for all members who own a home in the subdivision. The documents also include how the association conducts business and establishes procedures and enforcement provisions, including fines and liens against property owners, and some HOAs even include foreclosure provisions.