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HOA Fundamentals - the Good, the Bad, and the Ugly

~5-minute read

HOAs (Homeowners Associations) can be a value-protecting asset or a daily headache, depending on how the community is run and what the rules actually say. If you’re buying or selling in Tennessee or Georgia, the details matter because HOA power often comes from two places:

  1. The neighborhood’s governing documents (Declaration/CC&Rs, Bylaws, Rules)

  2. State law (and court decisions interpreting it)

This guide covers the basics, the benefits, the biggest pitfalls, and the state-specific issues that can surprise buyers and sellers.

Quick note: This is educational, not legal advice. HOA documents are contracts—if something feels “high stakes,” a local real estate attorney is worth it.

HOA basics (what an HOA actually does)

Most HOAs are set up to:

  • Maintain common areas (entrances, pools, private roads, landscaping, lighting, stormwater ponds, etc.)

  • Collect dues and sometimes special assessments

  • Enforce restrictive covenants (the rules you agree to when you buy)

  • Apply penalties when authorized (warnings, fines, attorney fees, liens)

The HOA’s power lives (or dies) in the Declaration/CC&Rs and the procedures in the bylaws—not in what a board member “says is the rule.”

The benefits (why buyers sometimes prefer HOAs)

A well-run HOA can:

  • Protect curb appeal and reduce “next-door surprises”

  • Spread major costs across the community (pools, roads, roofs in condos)

  • Increase buyer confidence (especially for neighborhoods with amenities)

  • Help support resale value when the community is maintained consistently

For sellers: a healthy HOA can be a marketing advantage—if the finances and rules are buyer-friendly.

The pitfalls (where deals and budgets get wrecked)

1) Dues can rise — and special assessments are real

If reserves are low or maintenance has been deferred, owners can get hit with a special assessment. Buyers should look for:

  • reserve funding levels

  • upcoming projects (roads, roofs, pool repairs)

  • repeated “we’re postponing this again” notes in meeting minutes

2) Rules are often stricter than people expect

Common pain points:

  • rental caps / minimum lease terms / short-term rental bans

  • parking (street parking, work trucks, trailers)

  • fences/sheds/paint colors/roof materials

  • pets (limits and sometimes breed restrictions)

  • business use, signage, exterior changes

Tennessee short-term rental example (notable case)

Tennessee courts have treated short-term rentals differently depending on covenant wording. A key Tennessee Supreme Court decision held that “residential use only” wording did not automatically ban short-term rentals, while properly adopted amendments (like minimum lease terms) may be enforceable.

Takeaway: In TN, you can’t assume “residential use only” equals “no Airbnb.” The exact wording (and any amendments) matters.

3) Enforcement can escalate: fines → liens → foreclosure risk

This is where people get blindsided.

Georgia: foreclosure threshold

Georgia law generally does not allow HOA/COA lien foreclosure unless the lien is at least $2,000 (with statutory conditions).

Not every Georgia HOA is governed by the Georgia Property Owners’ Association Act (POAA). The POAA generally applies only to communities that have “submitted” to it in their recorded declaration (or later by amendment), so it’s worth confirming whether your neighborhood is a POAA association.

That threshold helps prevent extreme outcomes over tiny balances—but $2,000 can add up fast once late fees, interest, and attorney fees stack.

Tennessee condos: limited “super-priority” concept

For condos created under the Tennessee Condominium Act of 2008, the association has a lien for assessments (and, if authorized, fines).

Tennessee also gives condo associations a limited priority claim in foreclosure proceeds: up to six months of common expense assessments, capped at 1% of the first mortgage’s maximum principal indebtedness, subject to statutory rules.

(Translation: it’s not a “wipe out the mortgage” lien—more like “the association gets paid a small amount near the front of the line.”)

4) Amendments can be tricky — especially in Georgia

Many buyers assume: “If the HOA votes to change the rules, it applies to everyone.” In Georgia, that can be dangerously oversimplified.

Georgia law provides that a change that imposes a greater restriction on the use or development of the land won’t be enforced unless the affected owner agrees in writing.

Practical takeaway for GA buyers/sellers: If a community “recently changed rental rules,” you want to know whether the restriction is actually enforceable against this specific property.

5) Fines must be authorized (Georgia caution)

HOAs can’t always fine simply because a board wants to. Georgia appellate decisions have emphasized that enforcement power depends on what the declaration actually authorizes and whether procedures were followed.

Takeaway: “The HOA can fine you” is only true to the extent the documents + procedures support it.

Buyer checklist (TN + GA): what to review before you commit

If the home is in an HOA, request these early:

  1. Declaration/CC&Rs (use restrictions, rentals, pets, parking)

  2. Bylaws + Rules & Regs (how enforcement works; fine process)

  3. Budget + reserves (risk of special assessments)

  4. Meeting minutes (6–12 months) (conflict, lawsuits, big repairs)

  5. Current dues + what they cover

  6. Transfer/initiation fees (common closing surprise)

  7. Insurance responsibilities (especially condos: what HOA insures vs you)

  8. Rental policy specifics (caps, minimum lease terms, waitlists)

If you’re buying for flexibility (rent later, add a fence, park a trailer, etc.), HOA review is not optional—it’s a deal-breaker check.

Seller checklist: avoid HOA delays at closing

HOA-related problems can slow closings. Sellers should:

  • Order the HOA resale / estoppel package early (timelines vary)

  • Confirm dues are current (and resolve any violations upfront)

  • Gather architectural approvals for changes (fence, roof, shed, additions)

  • Be ready to answer buyers’ questions on dues, amenities, restrictions

Pro tip: The smoother your HOA paperwork, the smoother your buyer’s lender underwriting.

Bottom line

HOAs aren’t automatically “good” or “bad.” A strong HOA can protect value and keep a community looking great. A poorly managed one can create unexpected costs, restrictions, and conflict.

The win is simple: read the documents, verify the finances, and understand the enforcement reality before you buy (or list).

FAQs

1) What is an HOA and what do I agree to when I buy?

An HOA is a legal entity that enforces recorded rules (CC&Rs) and collects dues to maintain common areas. When you buy, you agree to comply with the recorded restrictions and HOA procedures.

2) Are HOA dues the same as property taxes?

No. Taxes go to the county/city. HOA dues go to the association and fund community maintenance and amenities.

3) Can HOA dues go up after I buy?

Yes. Dues can increase based on costs, reserve needs, or expanded services. Always review the budget and reserves.

4) What is a special assessment?

A special assessment is an extra charge for major expenses (roads, roofs, major amenity repairs), often tied to low reserves or deferred maintenance.

5) Can an HOA fine me?

Sometimes. Fine authority must be in the governing documents and applied using proper procedures.

6) Can an HOA put a lien on my home?

Yes. Unpaid dues and related charges can become a lien, which can affect refinancing and selling.

7) Can an HOA foreclose in Georgia?

Foreclosure can be possible, but Georgia statutes generally require a lien balance of at least $2,000 and other conditions.

8) What does “super-priority” mean for Tennessee condos?

It’s a limited priority claim in foreclosure proceeds for a defined amount of unpaid assessments (often described as up to six months, capped), subject to statutory rules.

9) Can an HOA restrict rentals or short-term rentals?

Often yes, depending on document language and enforceable amendments. The wording matters more than the rumors.

10) What HOA documents should I review before buying?

Declaration/CC&Rs, bylaws, rules, budget/reserves, minutes, and any pending special assessments or lawsuits.

11) Why do HOA closings get delayed?

Common causes: waiting on resale/estoppel packages, unpaid dues, unresolved violations, or missing architectural approvals.

12) What are the biggest HOA red flags?

Low reserves, repeated special assessments, ongoing litigation, inconsistent enforcement, and restrictive rental rules.

Sources


Next step: Contact a local real estate professional familiar with HOAs in your area to guide you through the process and ensure your interests are protected.


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📞 Phone: 423-708-2589


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