Everything You Need to Know About HOAs

June 22, 2023

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A Guide To The Different Parts Of HOAs

HOA is short for homeowners association. 

These organizations create and enforce rules to maintain a neighborhood or community. Homeowner associations also require fees from members to operate and improve common areas and sometimes offer amenities.  

Obviously, though, this is a general description. HOAs are nuanced and aren’t always the same. Each HOA community follows its own bylaws. 

In this article, we’re going to cover many different parts of HOAs and valuable information you need to know if you’re considering moving into one, joining an HOA board, or getting involved with an HOA in any way. 

The Basics 

HOA Boards 

An HOA board is the group of people who govern an HOA. Association boards typically consist of unpaid volunteers. They make sure rules are followed, fees are collected, the community stays clean, and standards are maintained within the property owners association.

HOA Inspections 

Because the board wants to ensure every property maintains or increases its value, inspections are vital. These inspections check structural components, wood decks and patios, electrical supply boxes, flooring, roofing, and more.  

HOA Fees 

HOA fees (also known as HOA dues) are an integral part of every HOA. Here are some key elements you need to know about monthly HOA fees: 

  • HOA fees are mandatory. If you purchase a property in an HOA, then you automatically become a member of that HOA. This means you must pay fees and late fees will result in penalties. These regular fees are required to live in the community and help maintain common areas, contribute to general maintenance, amenities, and insurance. 
  • HOA fees cover different services depending on the HOA. HOAs aren’t all the same. Some will have pool maintenance; some won’t. Some will have security guards; some won’t. The list goes on and on. This is why it’s essential to familiarize yourself with an HOA before you move in and see if the services match what you’re looking for. 
  • HOA fees vary in amount. There isn’t a one-size-fits-all formula for HOA fees. Location, size, type of housing, and services provided all factor into the cost of fees. 
  • HOAs can raise fees. HOAs have the right to increase fees. However, they must abide by state laws and their own governing documents when they go to raise fees. This usually involves a majority member vote or at least advance notification. 
  • HOA fees can impact your credit score. Pay them on time and in full or let the HOA know as soon as possible that you’re having a difficult month. You don’t want your credit score to suffer because of unpaid fees. 
  • HOAs can place liens on properties. Most HOAs have strict policies surrounding late fees. If you don’t pay on time and in full, they may take legal action to obtain the fees.  

Best Method to Collect HOA Fees 

Traditionally, people would pay fees in-person or through the mail. That said, these old methods are fraught with issues. Cash and checks are too easy to lose. Tracking requires handwritten receipts.  

These days, electronic payments offer efficiency and automatic tracking. The moment a payment is made a digital receipt is created for the HOA fee. Furthermore, electronic payments cannot get lost in transit. There isn’t a physical exchange that leaves room for payment to go missing. 

The benefits of electronic payments don’t end there, though. Electronic payments are also better for the environment. No one needs to use paper, ink, or postage every month. Almost 50% of waste from businesses is in the form of paper, so cutting out the need for it is crucial.  

Digital payments tend to lead to an increase in on-time payments as well. HOA members can set reminders and set up automatic payments, whether there are monthly or annual fees. Electronic payments typically allow different flexible payment types, too, so members can use credit cards, debit cards, or ACH transfers to take care of their dues. These conveniences and reminders help everyone. Members avoid late fees and penalties, and HOAs receive their money on time without needing to hassle anyone or deal with delinquent members. 

Additionally, accounting is simpler with digital payments. Payments move efficiently from one place to another, and record-keeping is automatic. Thus, no one needs to keep track of copious physical receipts or worry about losing cash on the way to the bank. 

Common HOA Rules  

HOA community rules are also known as covenants, conditions, restrictions (CC&Rs). 

By and large, rules govern the appearance of properties. Most homeowner association rules relate to: 

  • Roofing materials 
  • Lawns and gardens 
  • Holiday decorations 
  • Fences, sheds, and pools 
  • Property cleanliness 
  • Paint styles and colors 

Unenforceable HOA Rules  

While every HOA has rules you must abide by, there are some rules that are unenforceable. Hopefully, you don’t run across any of these, but it’s important to know about them in case you do: 

  • Rules that are selectively enforced: Consistency is a key part of every HOA rule. If your HOA doesn’t enforce a rule consistently, it’s probably unenforceable. Also, make sure your HOA enforces the rule without targeting specific individuals or groups of people. 
  • Rules that violate state or federal laws: If something violates the First Amendment then it’s unenforceable. HOAs, particularly in certain states, have limited power around how much they can restrict political signs and displays. Second amendment violations, Freedom of Religion violations, and clothesline restrictions are also things to keep an eye out for. 
  • Rules that are enforced without authority: HOAs have limited authority. They’re bound by their CC&Rs, bylaws, and state laws. For instance, they cannot impose fines at their own discretion. Every fine must be imposed according to bylaws and state laws. 
  • Rules that are enforced improperly: While HOAs can modify rules, they must do so by following their bylaws and state laws. For example, Georgia law requires HOAs to obtain a super-majority vote from members to pass amendments. Thus, a rule change is only legitimate if most of the members vote to make it so. 

How to Assess an HOA as a Potential Member 

Always vet an HOA before moving in. Remember they’re not the only ones who should conduct screening.  

Here a few things to keep in mind as you try to figure out if an HOA is right for you: 

  • The HOA’s financial condition: Does the board manage the budget well? Do they have a reasonable reserve fund? Are they doing what they can to preserve property values? Ask questions like these to make sure you’re joining a responsible community. 
  • What the HOA fees cover: What is the frequency of fee collection? What is the late fee penalty? What is the process for raising fees? Ask questions like these to understand how the HOA operates. 
  • The rapport between the HOA and its members: Does the board listen to its members? Do people like living in this community? Does the HOA create a harmonious living environment for its members? Reach out to members on social media if you can and see what they say. No one will know the community better than those living there. 
  • The HOA Rules: What are the CC&Rs? Do they work for you? Are there any you have issues with? Make sure this HOA is the right fit for you. 

HOA Loans 

An HOA loan is a sum of money an association borrows from a bank or creditor with the requirement that they pay back the money, plus interest, per the agreed-upon timeline. The interest is a percentage of the loan added to the principal.  

There are some important things you need to know if your HOA decides to obtain a loan: 

  • An HOA should work with a competent bank that specializes in community associations. It’s wise to only go to banks that have experience with HOAs.  
  • An HOA loan isn’t a solution to avoid raising dues. A loan will automatically require a raise in payments to account for operations, reserve funds, and the new loan payments. 
  • Side effects can impact homeowners. HOA debt can make it hard for homes in the community to qualify for certain mortgage or finance options. This can make it difficult for homeowners to sell their property while hurting the value of properties in the communities. This, of course, highlights the importance of having a set plan to pay back the HOA loan on time. 
  • Spending the money from the loan wisely is obviously crucial. The board should have a clear plan for how to spend the money. 

Association Insurance 

What about insurance? Community association insurance is made specifically for community associations. This insurance often has four main components: 

  1. Property insurance: This portion of the insurance typically covers buildings, perils and risks, and common area contents. 
  1. Directors and officers (D&O) insurance: D&O insurance for community associations provides financial protection to board members, officers, and other volunteers serving a community association against potential lawsuits and claims arising from their actions, decisions, or omissions while acting on behalf of the association. 
  1. Liability insurance: This portion of the insurance typically includes general coverage, slip and fall accidents, property damage, and personal injury. 
  1. Umbrella insurance: This insurance is an additional layer of protection that goes beyond the limits of primary insurance policies. 

Certain states like Florida have specific laws regulating the kind of insurance an HOA must obtain. That said, most states don’t require a specific kind of insurance for HOAs and leave it up to the HOA to pick the insurance. 

What are the Different Kinds of HOAs? 

Now that we’ve covered the basics, let’s look at the different kinds of HOAs out there. There are four main types: Homeowners associations, condominium associations, housing co-ops, and civic associations. 

HOA communities are the most common kind of association. These organizations of homeowners oversee maintenance and general upkeep of communities while enforcing bylaws and covenants. 

Next, we have condominium associations. The main difference between condo associations and HOAs is the scope of ownership. In condo associations, owners are responsible for everything inside the drywall and above the floorboards. Common areas like lobbies, parking garages and amenities such as swimming pools, fitness facilities, tennis courts and dog parks are jointly owned by all members in the association. 

Just like condo associations, housing co-ops are shared buildings with common areas. However, when you buy into a co-op, you’re buying shares in the co-op, not a certain unit. This ownership allows you to lease a unit within the community. 

Master associations are another type of HOA. A master community association is a type of homeowners association that is responsible for managing a large community, acting as an umbrella association. A master association is often needed when a larger community with single family homes, townhomes, or other property types has smaller subdivisions within it, which are known as sub associations. Sub associations within a master association are members of both the master association and sub association. They are also subject to the rules and regulations of that particular subdivision as well as the master association’s governing documents.

Lastly, civic associations are volunteer-based organizations with a goal to improve neighborhoods under their jurisdiction by working with people who live in communities. They often exist in places without functioning HOAs. Civic associations are groups of engaged community members who organize and unify to connect the local government. 

The Key Legal Powers of an HOA 

It’s important to understand the scope of power for HOAs. They don’t have unlimited power. Their main powers involve enforcing rules, collecting fees, imposing fines, and creating and changing rules. 

They have a responsibility to the community. Ultimately, they should do their best to enhance the HOA and members’ lives as it relates to the community. 

Each state also has rules that govern the legal powers of an HOA. These laws often cover things like how to set up an HOA, what kind of vote is needed to pass amendments, and more. 

Homeowners’ Rights 

What about members’ rights? Members should know some key things regarding HOAs: 

  • HOAs cannot discriminate. According to the Fair Housing Act, HOAs cannot discriminate based on race, color, familial status, national origin, disability, sex, and/or religion. 
  • HOAs cannot make arbitrary rule changes. HOAs cannot create rules that contradict community interests or are unreasonable.  
  • HOAs cannot impose absurd fines. Although most HOAs have the right to fine you, the fine must be justifiable and reasonable.  
  • HOAs cannot stifle your voice. If you have an issue with something, bring it to the board and file a complaint.  
  • HOAs cannot restrict lawsuits. You can sue your HOA for legitimate reasons. 
  • HOAs cannot have meetings without adequate notice. Your HOA must provide notice for upcoming meetings. They cannot hold secret meetings or prevent you from engaging at meetings. 
  • HOAs cannot prohibit satellite dishes. You can install satellite dishes per the FCC’s OTARD rule. HOAs cannot forbid this, but they can limit the size and dictate the general placement. 
  • HOAs cannot restrict access to financial and HOA documentation. As a member of an HOA, you can request access to developer documents, declaration of CC&Rs, board and membership meeting notices and minutes, bylaws, HOA insurance policies, copies of judgments, rental records, and much more. 

Key Responsibilities for HOA Managers 

Now that we’ve covered the basics and gone over rights, it’s time to shift gears. Many successful HOAs have managers. Here are five keys to being a great HOA manager

  1. Financial Management: Managers are typically in charge of invoicing and taking care of collections (whether online or in-person). Managers typically must track delinquencies and ensure everyone in the association pays on time and in full.  

HOA penalty fees, late fees, setting up payment plans, placing liens, and starting foreclosure proceedings are also a part of a manager’s role. 

Regular financial reporting is a vital part of every manager’s job. The board needs to understand the financial health of the HOA to make sound decisions. Managers need to work closely with professionals to ensure the board has a clear view of expenses, income, reserves, etc. 

  1. Common Area Maintenance: Ensuring common areas are safe and clean, finishing special projects within budget, creating effective preventive maintenance procedures and schedules, and planning and evaluating maintenance contractors are all examples of this responsibility.  
  1. Compliance and Legal Matters: While an HOA manager doesn’t need to be a lawyer, they do need a great understanding of applicable laws. Part of a manager’s job is to keep an HOA out of legal trouble.  
  1. Vendor Management: Most HOAs work with external organizations and contractors to ensure the HOA stays in great condition. Managers need to prepare requests for proposals, vet different options, and help the board select the best choice. 
  1. Communication: Every part of a manager’s job involves communication in one way or another. Great managers know how to keep everyone on the same page. 

The Pros and Cons of a Self-Managed HOA 

HOAs can hire HOA management companies to take care of operations. However, some HOAs decide to keep things in-house. They may hire a manager and lean on a board to get things done rather than hiring a professional HOA management company. There are pros and cons to this as we’ll detail below. 

The first advantage is the cost savings. HOA management companies are expensive, and homeowners must pay higher fees to cover the cost.  

The second pro is enhanced community. Self-managed HOAs encourage community members to come together and meet common goals. Thus, most self-managed HOAs lead to closer communities than HOAs run by professional companies. HOA management companies are typically more focused on profits and rules.  

The third pro is fewer rules. Most of the time, community-run HOAs set up fewer rules than those run by professional management organizations. Why? Because outside companies prioritize property prices and traditional practices. 

The last advantage is increased autonomy. Self-managed HOAs are typically more in sync with members. They usually enact things that help members more directly.  

While these advantages are great, there are cons to self-managed HOAs. The first one is management issues. A professional management company brings a lot of experience and skill. They know what it takes to manage an HOA. They have the resources and tools to keep things running smoothly. 

Second, compliance is simpler with HOA management companies. Some laws relate to the formation of HOAs, the development of bylaws, and necessary documentation. It can be difficult for a self-managed HOA to navigate these tricky legal waters. Professional management companies, on the other hand, tend to be extremely familiar with the legalities of HOAs. 

Third, interpersonal conflict can be a major con with self-managed HOAs. We all know strengths can turn into weaknesses in certain cases. Self-managed HOAs foster closer relationships between members and a greater sense of familiarity between those members, and this can sometimes cause ongoing issues in communities. Community members may use the HOA to compete or get back at others in the community. Rivalries on the board may impact peoples’ decision-making and then impact the entire community. 

Lastly, self-managed HOAs may lead to decreased property values. A poorly run HOA can make someone’s life ten times more difficult than it needs to be. HOAs that take absurd time to return calls or make decisions about large repairs can make it harder for current members to sell properties.  

The Best HOA Software 

HOA management software can transform any HOA. Here are some key features you should look out for if your HOA wants to adopt software: 

  • Member Management: This feature provides comprehensive member management capabilities, allowing your HOA to maintain a database of homeowners, their contact information, property details, and other relevant information. 
  • Built-in Accounting: This feature offers tools for automatic payments, fee collection, and integrations with dedicated accounting software like QuickBooks.  
  • Work Order Management: This feature helps you receive and coordinate maintenance orders with members and track the order to completion. 
  • Reporting: This feature houses all your data in a central location and lets you pull key reports to better understand your business. 
  • Communication: This feature allows you to communicate with members directly from a mobile app or cloud-based software. 
  • Community Management: This feature allows you to organize committees and subgroups. 

Great options for software include Wild Apricot, PayHOA, and CINC Systems. Visit reputable review sites like G2 and Capterra to learn more about them. 

Innago is the best option for the best price. No one can compete with free. Innago also has some of the highest ratings across the board of any property software management company.  


Almost a third of America’s population resides in HOAs. Thus, it’s important to know what they are and the intricacies of these communities.  

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