If you’ve even casually shopped for a home, you’ve probably come across three letters: HOA. Let’s look at how a homeowners association works and how it could influence your homebuying decision.

HOA Basics: Rules and Duties

A homeowners association (HOA) is a nonprofit organization that manages a community’s shared spaces and enforces its rules. Typically governed by a volunteer, homeowner-elected board of directors, the HOA maintains common areas including parks, landscaping, pools, and clubhouses.

The HOA collects fees from homeowners, reviews property-change requests, and addresses complaints and rule violations.

The Cost of an HOA

When you buy a home in an HOA community, you agree to pay monthly or annual fees. These fees cover the community’s operational expenses, such as common area insurance, utilities for amenities, and the upkeep of shared areas.

How much can you expect to pay? Costs vary widely by location and amenities, ranging from as low as $60 to as high as $800+ per month.

Knowing the HOA fee is important in the homebuying process, as these dues are part of your debt-to-income ratio that helps determine loan eligibility.

Living With HOA Rules

These rules – known as Covenants, Conditions, and Restrictions (CC&Rs) – are legally binding. Breaking these rules usually results in warnings first, fines second, and, in more serious cases, liens.

Common rules govern your home’s exterior – paint colors, landscaping, fences, additions, and other structural changes. HOA rules may extend to parking, pets, and rental restrictions. Knowing the HOA rules before you buy is crucial.

The Pros of HOA Living

  • Amenities: Access to pools, fitness centers, and green spaces that would be costly to maintain yourself.
  • Appearances: HOA oversight can help keep a community tidy and attractive.
  • Maintenance: In some communities, exterior maintenance reduces personal upkeep responsibilities.

The Cons of HOA Living

  • Added cost: HOA dues can add several thousand dollars per year to your housing costs.
  • Reduced autonomy: Rules usually limit your ability to personalize your home’s exterior.
  • Legal exposure: HOAs are backed by state law. They can place liens for unpaid dues and even initiate foreclosure proceedings.

It’s crucial to review the HOA’s governing documents before you buy. By Texas law, sellers must provide these to prospective buyers.