Can an HOA sell or lease common area property?
Reviewed by the OurHOA team · Updated July 2026
A cell tower lease or a strip of land sold to a neighbor runs into supermajority votes, lender consent, and a 30 percent tax bill. What it actually takes.
Selling and leasing are different asks
People use these interchangeably and the law does not. Selling means conveying title, and once it is gone it is gone. Leasing, granting an easement, or issuing a license lets somebody use the property for a period while the association keeps ownership. That distinction matters because most statutes and most declarations set a lower approval threshold for a lease than for a sale, and because a lease can be written to expire while a deed cannot. If your board is weighing a revenue idea, figure out which category it falls into before you do anything else, because that single question determines how many owners have to agree with you.
The supermajority is the whole ballgame
Boards routinely assume this is a board decision. In most communities it is not. Under the Uniform Common Interest Ownership Act, which a number of states have adopted in some form, portions of the common elements can be conveyed only if owners holding at least 80 percent of the votes agree, and any purported conveyance made outside that process is void. Oregon's planned community statute, ORS 94.665, splits the difference the way you would expect: 80 percent of lot owners to sell, transfer, or convey, but 75 percent to grant a lease, easement, right of way, or license. California takes a narrower cut at a related problem in Civil Code section 4600, requiring approval from members owning at least 67 percent of the separate interests before the board can grant one member exclusive use of a piece of common area. Your declaration can set the bar higher than the statute, and plenty do. Read both, and read them before you promise anyone anything.
The votes are not the only consent you need
Getting to 80 percent is often the easy part. Common areas are frequently encumbered by a deed of trust or subject to lender approval provisions, so mortgage holders may have to sign off. If the parcel is a limited common element assigned to particular units, the owners it is assigned to generally all have to agree, not just a supermajority of the community. Statutes typically forbid any sale that strips a lot of its access or its structural support, no matter how the vote goes. And the recorded plat may have dedicated the land to open space or drainage in the first place, which means the city or county has a say. There is also a secondary-market angle worth checking: conveying away amenities or common land can affect whether your community stays warrantable for Fannie Mae, Freddie Mac, and FHA financing, which shows up later as buyers who cannot get loans.
The cell tower lease, and why the term scares attorneys
This is the most common version of the question. A carrier approaches a community with a rooftop or a water tower or a corner of open space and offers rent that would meaningfully offset dues. The money is usually real. What catches boards off guard is the paperwork: these leases commonly run 20 to 30 years with renewal options, they are freely assignable to lease-aggregation companies whose interests are not the carrier's, and they grant the tenant access rights across your property at hours you do not control. Weak agreements leave the association responsible for removing the equipment at the end. Say your 90-home community is offered $1,800 a month. That is real relief on a $250 monthly assessment, and it is also a decision that binds owners who have not moved in yet. Have an attorney who has read one of these before look at assignment, access, interference, insurance, escalation, and decommissioning, and get the term itself scrutinized rather than just the rent.
The tax bill nobody budgeted for
Most associations file IRS Form 1120-H, which is the election under Internal Revenue Code section 528 that lets them exclude exempt function income - dues and assessments from members - from tax entirely. Rent from a carrier is not exempt function income. It is non-member income, and on Form 1120-H it is taxed at a flat 30 percent for most residential associations. So the $1,800 a month is closer to $1,260 before you account for anything else. There is a bigger trap behind the smaller one: to file the 1120-H at all, at least 60 percent of the association's gross income for the year has to be exempt function income. A small community with a large lease can fail that test, lose the election, and land on the regular corporate return with a much messier calculation. Run the numbers with a CPA who works with associations before the board presents a figure to the membership, because a revenue projection that ignores tax is the kind of thing owners remember.
When a neighbor wants to buy a piece of it
The other common version is much smaller and just as fraught. An owner whose fence has crept ten feet into the greenbelt wants to buy the strip and make it official, or wants to expand a patio onto land the association owns. Sometimes this is the sensible fix for an encroachment that has existed for fifteen years. But it is still a conveyance of community property, which means it needs whatever vote the declaration and statute require, an appraisal so nobody can claim the board sold shared land cheap to a friend, and a clean survey and legal description. Consider whether an exclusive use easement or a license accomplishes the same thing without permanently shrinking the community's holdings. And think about precedent, because the moment one owner gets a slice of the greenbelt, the three owners on either side have a fairness argument that is hard to answer.
How to run the decision so it holds up
Work in this order. Confirm what the recorded declaration says about conveyance and about leases, then check your state statute, then take the higher threshold. Get a written legal opinion before you spend money on anything else. Have the property appraised or the lease terms independently reviewed so the number in front of the members is defensible. Disclose plainly what the association is giving up, for how long, what it gets, and what the tax treatment will be. Then notice the vote properly, count it against the right denominator, which is usually all owners rather than those who show up, and record the instrument correctly afterward. Keeping the declaration, the appraisal, the legal opinion, the ballots, and the recorded documents in one place where any owner can find them is the difference between a decision the community accepts and one that gets relitigated at every annual meeting for a decade, and that record of what was decided and why is a large part of what OurHOA exists to keep for self-managed boards. None of this is legal or tax advice, and approval thresholds, lender consent requirements, and the tax treatment of non-member income vary by state and by your governing documents, so involve your association attorney and a CPA before the board commits to anything.
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These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.