Lawsuits, disputes over lawn length and ornaments and even defecating in someone's yard: Homeowners associations can lead to incidents that are the stuff of nightmares.

HOAs are typically tasked with maintaining a neighborhood or building's aesthetic standards and amenities and services like trash and recycling pickup. Some 43.6 percent of all homes for sale have monthly HOA fees, according to a January report from Realtor.com.

These services come at a cost. The median monthly association fee was $135 in 2025, Realtor.com, or $1,620 annually.

In a perfect world, HOAs keep the neighborhood looking and functioning great, and dealing with them is a pleasure. But at times, they are the source of headaches for property owners. Some 57 percent of people who have an HOA in their community or building don't like it, according to a 2024 Rocket Mortgage survey. One in ten polled were considering selling their home for HOA-related reasons.

"The biggest thing about an HOA community: You're not just buying the home, you're buying the community's rules, fees and financial obligations," Leah Sajovits, director of luxury sales at New York City-based Douglas Elliman Real Estate, told The Independent in an email.

The role of the HOA

HOA's maintain a reserve of funds to pay for future expenses such as community improvements and repairs. If the reserve is short on money and repairs are needed, HOAs will turn to homeowners to cover the cost.

"If the association does not have a reserve for repairs and future expenses, homeowners can suddenly be hit with a large assessment," Sajovits said.

An assessment refers to when HOAs require homeowners to pay an extra fee on top of their monthly dues to cover expenses. HOAs with a history of assessments can mean financial surprises for homeowners.

"Homeowners are often required to pay a lump sum or a series of payments within a set timeframe, which can affect household finances," according to Rocket Mortgage.

A buyer's agent can request the minutes from HOA meetings to spot any reserve or assessment issues, Sajovits said.

Another key financial area to watch for is how many homeowners are late on their HOA fee payments.

"If more than 5 percent of homeowners are late on payments, then the neighborhood budget is in trouble," Nathan Cain, owner of Nashville-based real estate firm Pinnacle Realty Advisors, told The Independent in an email.

The HOA blacklist

Certain condominium complexes - which HOAs can oversee - can land on a mortgage blacklist that bans homebuyers from using conventional, Federal Housing Administration and Veterans Affairs loans to pay for the home.

If a homebuyer is considering a condo complex that's on a blacklist, it typically means that the property fails basic requirements for reserve funding and building standards, said Keith Lucas, founder of relocation firm Retirement Life U.S.A.

"It is common [that] underwriting will reject a community if the association has inadequate reserve funding [or] fails to meet minimum budget allocations," he told The Independent in an email.

Budgets without enough money could result in HOAs letting necessary repairs linger, which puts the building and its inhabitants at risk.

Other blacklist reasons include deferred maintenance, critical repair needs, inadequate property insurance or the HOA being tangled in "significant" litigation over the building or its residents, according to RISE Association Management Group, a Houston-based condo and HOA consultancy.
 

HOA lawsuits

HOAs involved in a lawsuit or with a history of lawsuits are a red flag, said Herman Hartanto, founder of real estate firm Tampa Fast Home Buyer.

The issue goes beyond the subject of the court case - homeowners could be responsible for helping the HOA cover the cost of its lawyers, Hartanto told The Independent in an email.

Those ongoing legal battles can put a community on a mortgage blacklist or make homeowners insurance more difficult for HOA members to obtain.

Sajovits also recommends that prospective buyers review the HOA's meeting minutes to understand what's happening behind the scenes during the legal battle - "they can reveal what is really happening inside the community," she said.