If you purchased a house within a homeowners’ association, you may be able to opt out of the community. However, this may be a long and expensive process with an HOA attorney, so make sure this is the route you want to take.
You’ve just purchased your dream home… and found yourself in an HOA membership. Now you’ve got questions: What is an HOA? Is it a good idea? Are there benefits to an HOA? Am I stuck with this? Can I opt out of an HOA? What are my options?
Let us answer some of your questions so you can proceed with confidence.
What is a homeowners’ association (HOA)?
To put it simply, a homeowners’ association (HOA) is the governing body of a common interest community. They hold a group of houses to a certain standard set out in the Covenants, Conditions, and Restrictions. These are filed with the county and signed by the homeowner.
Each homeowner must follow these rules and pay dues monthly to maintain and regulate the community. In turn, the HOA will ensure that common areas are in good condition and that homeowners follow the rules of the Covenants, Conditions, and Restrictions.
Covenants, Conditions, and Restrictions (CC&Rs)
Simply put, these are the HOA’s rules. This is a document you sign when you purchase a house governed by a homeowners’ association.
Examine this document carefully before purchasing. It determines how broad the authority of the HOA is, explains limitations on fees, specifies whether an owner can leave the association, and details how an owner can leave.
Pros and cons of HOAs
Though HOAs aren’t for everybody, some homeowners prefer living in an HOA community. Before purchasing your property within an HOA, consider these benefits and drawbacks.
Here is a list of the benefits and the drawbacks to consider.
- Consistent property values. Generally speaking, HOAs can keep the community property values consistent. This is because HOA dues support neighborhood maintenance and offer amenities to homeowners that other neighborhoods don’t.
- Amenities. Usually, there are community-wide amenities such as beach access, swimming pools, fitness centers, or parks. Not only do HOAs provide membership to these services, but they also maintain the locations.
- Services included. HOA services are generally included, such as snow removal, security, and lawn care. While an extra fee is required to fund these services, it’s nice to know you don’t have to shovel your driveway every morning.
- Restrictive rules. Those that do not like living in an HOA will usually point out that they are expensive and restrictive, often involving fines for homeowners that break HOA rules. Rules can even dictate the appearance of your house, such as exterior paint colors and landscaping choices.
- May restrict home activities. At times, they can restrict activities inside the home, such as running a home business or throwing a big party. Some HOAs even limit how many cars can be parked in front of your house.
- Additional fees. The HOA can impose additional fees to cover a specific project (such as septic work or mold remediation), or to pay for renovations intended to increase the property value (such as building a clubhouse or recreation facilities).
Whether these pros and cons make you want to join an HOA or not, you’ll need to find the right financing for your dream house. Start with the lenders below.
Voluntary HOA versus mandatory HOA community
A voluntary HOA leaves the membership choice to each homeowner. You may not need to opt out of the association, just choose not to join. You cannot be fined for non-compliance with rules if you are not a member of the voluntary HOA, but you may miss out on some of the benefits. Additionally, some of the community association rules may still affect your property (such as what kind of fence you can install).
Voluntary HOAs can become mandatory HOAs. Generally speaking, homeowners do not need to join voluntary HOAs once they have become mandatory, but they may want to opt in if the membership benefits are appealing to them. Mandatory HOAs are much more common, making up the majority of HOAs. Membership is usually part of the deal when you buy a house in an associated neighborhood.
If a development decides to organize an HOA after you already own a home in that neighborhood, they typically can’t force you to join an association against your will.
How can I reduce these HOA fees?
While most HOAs will come with fees, there are a couple of things you can do to lower whatever fees you’re responsible for.
- Get involved. Consider getting involved. You can attend board meetings or even become one of the board members. As a board member, you might be able to negotiate with contractors to lower the costs of some of the services.
- Specific services. Opting out of specific services (like snow removal) may reduce your monthly fee. However, this often isn’t allowed due to liability issues or even because it isn’t fair to the rest of the community. You may be able to negotiate with the board of directors.
What if I just don’t pay dues to the association?
Unpaid dues may result in additional late fees and collection activity, which could affect your credit score. In some states, a foreclosure action may be initiated by the HOA. However, state and local laws regarding foreclosure vary greatly.
Although opting out of an HOA is very difficult, there are some instances where you may have a chance to do so.
The easiest way to opt out of an HOA is not to move into an HOA-managed community or to sell your house if it’s stuck in a mandatory HOA. Of course, this may not be ideal or practical for your circumstances. If you think you have a chance of getting out of an HOA, know that it will be a struggle and that you’ll likely need legal counsel.
Do you need a lawyer to opt out of an HOA?
Failure of HOA to do their job
The HOA is responsible for enforcing the CC&Rs, conducting regular meetings, and holding board elections. If these events aren’t happening, you may be able to argue that the CC&Rs are no longer enforceable. An attorney would need to argue this case before a judge.
Deciding whether the CC&Rs are enforceable is ultimately the court’s decision, and may take years. The court could declare the HOA dissolved if the community has been essentially living without an HOA.
If your HOA did not file its paperwork properly, or if there is a serious error (generally technical or legal) in the CC&Rs, you might be able to argue that the CC&Rs are no longer applicable. This will require legal action with a very competent attorney skilled in HOA law.
If the association has membership renewals, you may be able to leave at the next renewal date.
The HOA board of directors must act in the best interests of the whole community. By way of example, your HOA cannot decide that it will provide a service to all the homes in the community except yours.
However, in some special circumstances, different services may be provided to some homes legitimately. As an example, if you lived on a public road while the rest of the community lived on private HOA-owned roads, likely the local government would be responsible to provide you with snow removal. As you would receive different services, you may be able to negotiate lower HOA fees.
Additionally, HOAs cannot discriminate because of race, ethnicity, disability, gender, religion, familial status, or sexual orientation. If you feel that you have been treated unfairly, you may be able to argue your case in court and possibly be awarded damages against the HOA. That being said, receiving damages doesn’t mean you can leave the HOA.
Check your CC&Rs to see if they include a de-annexation clause. Without a de-annexation clause, it’s unlikely that the association would consider it.
Usually, this will require a majority of HOA members to approve your request, and it is very unlikely that the other members will support you. Everyone else’s fees will likely go up if you do not pay fees. In addition, the HOA would be powerless to act if you alter your property in a way that brings down the property values of the community.
You would need to convince the other homeowners that it is in their best interests to let you leave (for example, that having a larger-than-average lot increases maintenance fees for the HOA). Invoking a de-annexation clause may involve a legal request through the court system.
Wrongful or fraudulent inclusion
If you did not know about the HOA when you purchased the house, this could be considered a form of fraud. Review the purchase paperwork very thoroughly to make sure that the HOA wasn’t mentioned somewhere in the paperwork. If you can prove that you were not told about membership in the association, you may be able to convince a judge to let you leave HOA membership.
Likewise, a court may determine that your property is different enough to distinguish it from the rest of the HOA (for example, a primarily gated community on private roads, while your house is outside the gates and was built separately). If you aren’t receiving the same services as the other homeowners, this will strengthen your case.
If you attempt to dissolve the HOA, this will be a long, expensive process. You may be successful in dissolving the HOA if you have the support of the community. The CC&Rs will include details on dissolving the HOA, including the percentage of owners necessary to agree to dissolve.
Generally speaking, at least 80% of members must approve HOA dissolution, though it varies by state. The members will vote on dissolution at a board meeting. If there is an affirmative vote for dissolution of the HOA, you’ll need to file Articles of Dissolution (or equivalent) with the Secretary of State in your state. After the filing, the HOA’s debts will need to be settled, and ownership of its assets will need to be transferred.
Legal limits of HOAs
There are federal and state laws that may prevent HOAs from enforcing restrictions that are considered against public policy. By way of example, HOAs are prohibited from banning service animals by federal law.
You may also have a legal right to an exemption under the Americans with Disabilities Act. For instance, you can install a wheelchair ramp regardless of HOA community rules on exterior modifications.
- If you’re looking for a home, communicate clearly with real estate agents regarding whether you want to be a member of a homeowners’ association.
- If you are part of an HOA membership and want to opt out, make peace with the likelihood that it will be a long, expensive process.
- HOA law is highly specialized. If you hire an attorney, make sure they are HOA experts.
View Article Sources
- HOA FAQs — Alabama Secretary of State
- Frequently Asked Questions for HOA Homeowners, Board Members, and Other Interested Parties — Colorado Department of Regulatory Agencies
- What Does HOA Stand For And How Do HOAs Work? — SuperMoney
- What Are HOA Fees And What Do They Cover? — SuperMoney
- Are HOA Fees Tax Deductible? — SuperMoney
- What is a Deed-Restricted Community? Everything You Need to Know — SuperMoney
- How to Finance a House — SuperMoney
- Best Mortgage Lenders | June 2022 — SuperMoney
Lauren Hughes is a personal finance writer who enjoys helping people understand complex financial topics in an easy-to-understand style that empowers her readers to take action. Lauren has over a decade of experience as a paralegal and a background in technical writing for procedure and customer service manuals.