A homeowners association (HOA) is probably not on your mind when you’re thinking about buying a home. But if you do choose a home that has an HOA it’s important to calculate those fees into your budget.

What is an HOA?

An HOA is a legal entity that manages a shared housing complex. All condos and almost all townhomes fall under the jurisdiction of an HOA. An HOA collects monthly dues from its members which are used to fund activities. You will need to find out how much the dues are when you’re trying to figure out how much home you can afford.

What do I get for my HOA dues?

The HOA manages and pays for the common elements of its shared space. This can include a shared roof for the building, landscaping, snow removal, shared fencing, mailboxes and entry gates. It also includes paying for the development’s security. The coverage will be different depending on whether you have a condo, townhouse, or detached home. It also depends on the amenities the HOA offers.

How does an HOA work?

You will automatically become a member of an HOA when you buy. Usually, all HOAs have a president, treasurer and secretary to divide up responsibilities. Larger associations have elected board members to be responsible for making decisions about the association’s activities. Smaller condo buildings usually more informal HOAs and often don’t have a board to make major decisions, so they do an all-member vote.

What are an HOA’s rights and rules?

An HOA is a legal corporation, registered with the Secretary of State. It has a formally filed charter and by-laws, as well as covenants, conditions and restrictions (CC&Rs). Some of these rules can directly affect how you live. This can include things like the length of your grass, the exterior paint color of your home, and even remodeling the interior.  Some condo HOAs will require that you have carpet, so the downstairs neighbors can’t hear the noise of your footsteps. One CC&R to be careful about is a rental cap which limits the number of units that can be rented out. A rental cap is usually a maximum of 20 percent so that the building doesn’t in effect turn into an apartment complex. Some HOAs may require that all units be owner-occupied. If that’s the case, you should be careful if you’re thinking of upgrading and renting out after a few years. Another important thing to consider is pet limitations. Condo HOAs often limit the size or breed of pets allowed.