The 4 Critical Components of Homeowners Associations (HOAs)

BY Richard Montgomery TIMEJanuary 18, 2022 PRINT

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.

HOAs are a trade-off for residents. Residents lose some control over their property in exchange for the association’s benefits.

The Cost of an HOA

The members divide the costs of operating the services and benefits of the organization. The larger the HOA, the lower the price of belonging, as those costs are shared with more members.

Amenities often create higher dues. Swimming pools, golf courses, private infrastructure improvements, and clubhouses are examples of significant amenities. Minor benefits such as lawn care or an entry gate are common, but relatively inexpensive to operate.

With few units and no amenities, HOAs could operate monthly for less than $100 per home. More significant associations with community rooms and swimming pools could be several hundred dollars.


The covenants can vary considerably with the type of housing. For example, mid-rise buildings, single-family detached, zero lot line with shared walls, and other configurations require different covenants and budgets. Single-family detached will allow grilling on the patio, while mid-rise structures will likely disallow patio grilling. If a standard architectural design is essential, you may be required to paint your front door a particular color. Many HOAs control where vehicles can park and for how long.

Conflicts With Neighbors

Residents are often concerned with keeping HOA dues low. In contrast, other residents are more concerned with high-quality maintenance and aesthetics. The covenants can deal with noise abatement, placement and type of outside plantings, and many other factors. The differences in resistance to restrictions and human nature bring conflicts between neighbors. Disputes with neighbors or the HOA rules themselves are the source of negative feelings about HOAs. Here is a Dear Monty answer about an HOA rule: DearMonty.com/hoa-exit-fee/.

These are the critical issues in deciding if a specific HOA is right for you. The root of most problems is that the property owner often did not read or understand the significance of a covenant. Please read the documents or have your attorney review them. Read the financial statements or have your accountant review them. Understand how the covenants could affect your lifestyle. Request the association’s meeting minutes for different years to learn what issues come to the board. Interview a few residents to see if they are satisfied with the association.

Richard Montgomery is the author of “House Money: An Insider’s Secrets to Saving Thousands When You Buy or Sell a Home.” He advocates industry reform and offers readers unbiased real estate advice. Follow him on Twitter at @dearmonty or at DearMonty.com. Email him at monty@dearmonty.com.
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