If you are looking to buy a house, condo or townhouse you will likely look at some that are part of a homeowners association. New home buyers who have never lived in a community with an association before typically have many questions. The Community Associations Institute estimates that nearly one out of every six Americans lives in a community association and that, in 2007, HOAs governed 23.8 million American homes and 58.8 million residents. 

A HOA is essentially an internal regulatory board often found in planned communities, gated communities, condominium complexes and subdivisions.  A homeowners association collects fees or "assessments" from individual home owners to cover certain expenses, such as maintenance of common areas, insurance, and health or safety improvements.  An HOA also enforces the rules and regulations set forth by the developer or property owner.

Before purchasing a home that is regulated by an HOA it is important to read the by-laws governed by the association and ask questions. Below are some questions that can get you started so you have all the information you need to make an informed decision.

  • Ask the HOA about parking limitations/restrictions, pet limitations/restrictions with respect to quantity, size and type, restrictions related to outdoor decor/furniture/grilling restrictions (for balcony/patio), and if there are any current outstanding assessments the new owner will be responsible for assuming.
  • Be certain to ask if there is any active litigation, as this may affect buyer financing, and also indicates possible red flags with property in general you will want your home inspector to do extra due diligence on.
  • If you don't agree with something in the bylaws/restrictions, do you have any recourse?
  • What do monthly HOA assessments/fees cover? HOA fees typically cover common ground concerns such as landscaping, pest control, pool and fitness center maintenance, guard gate/security services and common area taxes. They sometimes cover utilities such as trash, water or cable television.
  • How often do HOA assessments/fees increase (and at what percentage), so you can be prepared for rising costs down the road?  Also ask, will the members be able to vote on the rising cost?

There are pros and cons to being a part of a homeowners association, it may or may not fit with your lifestyle and ideals.  Before considering a home with an owners association read the agreement.  Ask the homeowners in the community about the services they receive.  This way you can get a feel for how happy the locals are about their association.  Also, be sure to make sure you know how the association deals with issues that arise.  It is better to be safe and know what you are getting into before you fall in love with the house.