Homeowners Association (HOA) Definition
A homeowners association, or HOA, is an organization in a neighborhood, condominium, or other jurisdiction that creates and enforces rules for the residents and their properties.
Certain jurisdictions may require homeowners to become a member of the HOA and require dues, called HOA fees, typically collected monthly or annually.
The HOA uses the funds to benefit members of the HOA, such as facility upkeep of common areas.
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What Does an HOA Do?
An HOA consists of a board of directors who are elected to enforce their established rules and regulations.
The “Declaration of Covenants, Conditions, and Restrictions”(CC&Rs) outlines the stipulations homeowners are expected to uphold.
Examples in CC&Rs include:
- Lawn Requirement
- Parking Restrictions
- Pet Regulations
- Visitor Expectations
- Other Maintenance Requirements (such as color of mailbox or required home upkeep)
The document of CC&Rs also outlines the penalties for violations of the rules, which may include fees, forced compliance, or litigation.
The pros of an HOA include:
- Self-governance in case of conflict
- Services resulting in a well-kept neighborhood or common areas
- Upheld property values
The cons of an HOA include:
- Fees (required to run HOA)
- Imposing of restrictive rules or inconvenient assessments
- Poor volunteer management and inefficient spending of HOA fees
We hope you find this article helpful. If you have any questions, please feel free to connect with a financial advisor in Wichita Falls, TX. For those of you who don’t live locally, check out our financial advisor page instead.
Homeowners Association (HOA) Definition FAQs
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.