Understanding Homeowner Associations
A homeowner association (HOA) governs a community of homes, whether townhouses, a planned community, or a residential building. HOAs are run by a board of directors and have monthly or annual fees. The associations may impose fines on noncompliant homeowners.
An HOA differs from a property owners association (POA) in that the latter is not restricted to owners, but may include anyone interested in the property. Developers usually create an HOA when a community is built and hand it over to people who buy homes in the community. Purchasing a home in these communities automatically earns the owner an HOA membership.
HOAs are governed by rules and regulations in a document called covenants, conditions, and restrictions (CC&Rs). The purpose of CC&Rs is primarily to protect property values and maintain the aesthetic appeal of a community. This means residents have restrictions placed on their ability to make specific changes to the property, such as fence height or color of paint on a house. The rules differ by association.
HOA members are bound by the rules and regulations in their community. Consequently, before buying a house, individuals should check to see if it is HOA-governed. Some people may find that the rules and regulations are too restrictive or that the fees would be a burden.
Despite downsides, such as the lack of freedom to customize a home in any way desired, HOAs are increasing in popularity. This is connected in part to various benefits that make HOA homes outsell their counterparts. An HOA takes care of landscaping and maintenance, saving homeowners the time to perform such tasks. The HOA takes care of amenities such as pools, clubhouses, fitness centers, and parks, and the HOA handles paperwork, such as permits, and ensures that homeowners observe health and safety codes.
The shared amenities offer HOA members a sense of sharing a living space with their neighbors. Aside from rules and regulations, an HOA can help homeowners become invested in their community. This is possible through organizing gatherings, various events, creating a newsletter, and other group activities.
Depending on location, some HOAs may have an all-inclusive package that pays utility bills. Although this is typically found in high-end communities and comes at an extra cost, it simplifies things when the household bills are charged as one payment.
Since CC&Rs tend to protect property values, there is less fluctuation in the price relative to other neighborhoods. The rules can be amended to fit factors that may affect property values. An example is ensuring a peaceful community through conflict resolution. If any member disturbs the community peace, an HOA may establish a new policy to prevent repeat instances.
A portion of the fees is put into a reserve fund, which helps pay for large or unexpected expenses, such as replacing a roof or repairing an elevator. HOA members may have to contribute special assessment fees if the reserve fund cannot cover costs for expenses caused by an event such as a flood or tornado.
While some HOAs are managed professionally, others are run by community residents as volunteers. However, HOAs are legal entities with the right to enforce rules. Some HOAs have the right to foreclose on a property for violating CC&R or failing to pay fees.
Therefore, it is critical to find out all necessary information on the rules that govern a certain HOA before agreeing to buy a home in a given community. To access the CC&R, an interested party may have to visit the county recorder’s office where the property is located, local title companies, or by contacting the HOA.
