Demystifying Homeowner Associations

Fulton 555, a 139-unit condominium development in San Francisco’s Hayes Valley neighborhood.

Townhomes, condominiums, homes in planned developments, co-op style housing — most of these types of residences are sold along with a homeowner association (HOA) agreement.

Educational Community for Homeowners (ECHO), a San Jose-based nonprofit that assists homeowner associations with everything from finances to insurance, states that, “homeowners associations act as both landlords and mini-governments to their members, which means homeowners have rights that HOAs should both acknowledge and protect.”


HOA fees can vary greatly. For instance, a neighborhood might have an HOA and charge a minimal fee (such as $10 per year) in order to be able to put guidelines or restrictions on exterior buildings and fences. A new luxury high-rise building may charge a $2,000 monthly fee to maintain common areas and for high-end amenities and concierge services.

That’s true of the current new crop of condos now selling or under construction in San Francisco, according to Pacific Union joint-venture The Mark Company’s Monthly Report for September. At 181 Fremont Residences, a 70-story, ultraluxury building in the South Beach neighborhood, monthly HOA fees average approximately $2,500 per month. Owners will have access to a 52nd-floor wraparound terrace, a fitness center with a yoga room, multiple lounges with a catering kitchen, and a library and conference room, as well as concierge services.

A few blocks away at The Harrison, HOA fees range from approximately $1,000 to just under $1,900, with residents enjoying amenities and services such as a 24-hour lobby attendant, valet parking, a fitness center, an outdoor terrace with a swimming pool, and an exclusive club on the 49th floor called Uncle Harry’s.

At Fulton 555 in Hayes Valley, HOA fees run between $475 to $815 per month. For that fee, residents will have access to a rooftop terrace, a private meeting space, a dog park, and a bike workstation.

The HOA details should be presented in the disclosure package. If a potential buyer is not presented with this information, they can keep an HOA contingency in place until they do have the documents to review.

With an HOA, resident typically pay a monthly (or yearly) fee, and these dues go into an account for agreed-upon maintenance and repairs. Most often, a board will set the fess charged by the homeowner association.

What type of repairs and maintenance an HOA fund covers is different for every development or association. Generally HOA fees cover items such as:

  • Landscaping of common areas
  • Maintenance and repairs of common areas like swimming pools, elevators, sidewalks, hallways, and garages
  • Building exteriors

What happens when a large repair is needed and the HOA fund doesn’t have enough to cover it? Residents can be asked, by special assessment, to contribute additional money to the fund.


In addition to fees, HOAs can also set conditions, like rules about paint colors on property exteriors and pet restrictions. The technical term for these rules is covenants, conditions and restrictions (CC&Rs). These rules can take some adjustment for someone who has previously owned a home without an HOA, as it can feel like a renter’s contract.

In fact, Investopedia’s “9 Things You Need to Know About Homeowners’ Associations” actually recommends that you “consider your temperament” when deciding if you can adjust to the constraints of an HOA.

Other items on that list include finding out how HOA fee increases are set, learning the rules, assessing the environmental practices, and learning about current or past conflicts and how they were resolved.

Housing Cooperatives

A housing cooperative is unique because the cooperative is actually a “business” owned by residents. Members typically form a not-for-profit cooperative corporation.

“Personal income tax deductions, lower turnover rates, controlled maintenance costs, and resident participation and control are some of the benefits of choosing cooperative home ownership,” according to Alameda-based Woodstock Cooperative’s website.

The National Association of Housing Cooperatives’ website offers a library of information about cooperatives, including answers to the questions: “what do I actually own?” “what is a share loan?” and “how do I accumulate equity?”

For more information about HOA fees, check out this SFGate article, What Do Homeowners Association Fees Pay For? If you are considering purchasing a property governed by a homeowner association, make sure to consult with your real estate professional about specific issues or questions that arise when you review the rules and regulations.

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