Article Courtesy of Yahoo Finance
By Laura Woods
Published May 2, 2021
You’re planning to purchase a new home, and while browsing
online, you’ve noticed many of the listings you’re interested in contain
unfamiliar real estate terms. Specifically, you want to learn more about
homeowners associations (HOAs), tenants in common and condo associations before
This is important because you want to choose a new home where you feel
comfortable. The last thing you want is to purchase a property and quickly
realize it’s attached to rules or fees you didn’t completely understand.
Broadly defined, a homeowners association manages a planned community, which
might include single-family homes, condominiums or townhouses. Basically, a
governing body for the group, the HOA enforces set rules and manages certain
aspects of the community for a fee.
Increasingly common, nearly 60% of recently built single-family homes — and 80%
of houses in new subdivisions — are part of an HOA, according to the 2019 study
“The Rise and Effects of Homeowner Associations,” conducted by Wyatt Clark and
Matthew Freedman, published in the “Journal of Urban Economics.”
No two HOAs are the same. Some charge an annual fee, while others require owners
to pay monthly dues. The average HOA fee is approximately $200-$300 per month,
according to Trulia. However, this varies wildly, according to factors such as
geographic location and the amenities provided.
Services covered under the HOA vary just as much but often include maintenance
of common areas, building upkeep, neighborhood amenities and insurance for
shared spaces within the community.
As noted above, being part of an HOA also requires adhering to community rules.
This might include ensuring your lawn is always neat and tidy, limiting the
number of people who can reside in your home, noise restrictions and parking
Essentially a different term for an HOA, a condo association is a governing body
for housing that is typically attached. Owners purchase their individual units
and part of the common areas owned by all residents.
Fees are collected on a monthly, quarterly or annual basis, covering costs
shared by all owners. As with HOAs, fees vary greatly according to factors like
geographic location and services provided.
Common services provided may include interior and exterior maintenance, shared
utilities — i.e., sewer and garbage collection — insurance and community
Tenants in Common
An entirely different real estate term, tenants in common refers to a situation
where at least two independent owners share one property. In this type of setup,
each person has equal ownership of all parts of the property.
However, the co-tenants may have different ownership stakes. For example, one
person could own 75% of the property, while the other owns just 25%.
This type of arrangement can be created at any time. Owners also have the right
to independently sell or borrow against their stakes of the property.
Understanding HOAs vs. Condo Associations
Jason Gelios, a realtor in Southeast Michigan, said services provided tend to
differ between condo associations and HOAs.
“Many people who decide to live in a condo association are looking for the
convenience of the included tasks which include lawn maintenance, snow removal
and upkeep of the exterior,” said Gelios, who is also the author of the book
“Think Like a REALTORŪ.” “In my local market of Southeast Michigan, I see either
younger couples starting out or senior citizens downsizing looking to purchase a
condo with an association.”
On the other hand, he said HOAs — i.e., those covering single-family homes —
don’t always provide as many services.
“Many newer subdivisions have HOAs as part of their community,” he said. “In a
subdivision, an HOA may only cover snow removal and blight laws, but only
require an annual fee.”
When searching for homes attached to an HOA or a condo association, it’s
important to read the fine print to really understand what the fees cover. You
want to make sure you can afford your mortgage, association expenses and other
ownership costs not included in the community fee.
For example, you might pay a monthly condo fee of $300 that includes some
outdoor maintenance — i.e., lawn care services and gutter cleaning — but still
be responsible for the cost of a new roof or painting your home.
This is important to know because you want to go into the situation with a full
snapshot of the financial obligations associated with ownership.
HOAs, condo associations and tenants in common each have their advantages and
disadvantages, so choose what’s right for your unique situation. Being as
informed as possible will allow you to make a decision that best fits your