HOA stands for Homeowners Association and is responsible for protecting and improving property values for people residing in the community. This is done by placing restrictions on homeowner’s activities and ensuring the maintenance of common areas. When house hunting, it is common to come across a property part of a homeowner’s association.
About 53% of homeowners are currently HOA members. This number is growing. Before you put your offer on the house, here are some things you can do to determine whether living in an HOA suits you.
What Does HOA Mean?
HOAs, or homeowners associations for short, are private organizations that manage some residential communities. HOAs set rules and regulations for residents to follow. They are most commonly responsible for communities of common interest, such as planned neighborhoods, condominiums, townhouses, or multi-unit apartments.
Living in an HOA can have its pros and cons. The rules established by the HOA are meant to preserve the neighborhood, and all properties will be protected from infringements. HOA members typically pay HOA fees. These fees are used to maintain the neighborhood’s common areas and keep them attractive.
How does an HOA work?
HOAs typically form when a community has been built. The homeowner association is set up by the developer, who then gives it to the buyers of the homes. These individuals automatically become members in good standing of the HOA.
The homeowners vote to elect a board of directors to run the HOA. The board determines the community’s services and features, collects monthly dues to cover those costs, and establishes and enforces community rules.
The Declaration of Covenants, Conditions, and Restrictions is the document that contains all these rules. People who purchase a house within the community must agree and pay monthly dues.
Why are HOAs Necessary?
Homeowners associations are usually formed by the same developer responsible for the community. This is a way for them and the community to keep in touch and ensure that it flourishes. Developers often add HOAs to their latest projects for managing and marketing homes and lots. Developers use homeowners associations to maintain a presence in a community they have built.
HOA, Community Associations, and Property Owner Associations
Whether you are looking for properties as an investor or homebuyer, at some point, you may encounter the term “community association.” A community association often refers to homeowners’ or other property owners’ associations.
Each of these associations serves a similar purpose, but each is designated differently by state and local laws. Property owner associations can also include community members or other owners interested in real estate in the area.
Types of HOAs
Although HOAs can be viewed broadly, there are many types of community associations, each with its structure. The following terms are available to prospective owners depending on the type and price of the property.
Homeowners Association – This is the most popular type of association. It has a board that creates and enforces rules and regulations. State law may apply to HOAs to ensure the board acts in the community’s best interests. The homeowners elect the board members. They are usually volunteers and receive no compensation for their services. Regular assessments are carried out to maintain and upkeep the community.
Condominium Association – A board of elected officials responsible for setting and enforcing rules and collecting monthly assessments to maintain common spaces and amenities within condominium buildings. Each owner owns their unit and a small portion of the shared property, such as gyms, pools, and spas.
Civic Association – These associations act similarly to regular HOAs, but less rigidly. Fees can be waived, and rules and regulations are not enforced as rigorously.
Townhome Owners Association – Owners in a townhome association, tend to pay lower monthly fees because they pay out of their own pockets to maintain their homes. This includes the costs for major repairs. The association may manage services such as trash and recycling collection.
Housing Cooperative – Residents of a co-op pay a monthly fee, which is determined by their unit size. Each unit is considered a part of the building, and its owners must contribute to its running costs. Co-ops can regulate who can purchase a unit. They can also place net worth or other financial requirements on potential buyers.
Civic Association – These associations act similarly to regular HOAs, but less rigidly. Fees can be waived, and rules and regulations are not enforced as rigorously.– A master association is often made up of several subdivisions or neighborhoods. Members pay fees to maintain shared spaces and amenities like roads and parks. The regulations are also enforced on members.
HOA Fees: What Do They Include?
As stated above, HOA communities will require you to pay fees. The fees can vary depending on the location and the amenities included. You can find out your monthly payment in advance to ensure it fits within your budget. You should note that HOA fees will vary depending on where you live and what amenities are included in the community. Here are some examples:
- Maintenance and repairs
- Landscaping
- Security
- Trash Pickup
- Pool, community gym, or shared areas
Before purchasing a home in an HOA community, it is essential to calculate any HOA fees into your monthly expenses. Your lender will inform you how much you will need as part of closing costs. The seller might have already paid a portion of these fees, and they will prorate them. This information is in your Closing Disclosure. These fees can be added to your monthly mortgage or paid in one lump sum.
What Are The Pros and Cons of an HOA?
HOA communities can be wonderful places for homeowners. Others, however, might find the rules restrictive and cumbersome. This list contains pros and cons that will help you make your decision.
Pros of HOA
- With minimal effort, your neighborhood will look neat and clean.
- The rules governing the appearance and maintenance will help to stabilize your property. This will increase your property value.
- You may access special amenities such as a swimming pool, clubhouse, gym, or security. HOA-sponsored events may offer opportunities for you to socialize with neighbors.
- An HOA board will mediate and hear complaints from neighbors about property-related issues.
Cons of HOA
- HOAs often have much more power than you ton how to live and manage your home. You may be restricted to specific paint colors or designs, or you might not be allowed to keep pets.
- HOA fees may increase your monthly housing cost, especially if you live in an area with high home prices.
- HOAs are not afraid to send violation notices to minor infractions.
What Are Common HOA Rules?
The rules enforced by communities will differ from HOAs, as each community has its priorities. However, each community will have its own rules covering everything from the type of mailbox to whether you are allowed to keep a dog. Some HOAs may even ban certain breeds of dogs. However, the majority of HOA rules will fall within one or more of these categories:
Fees: All homeowners associations are subject to fees. Residents who want to live in an HOA-governed area must pay the applicable fees. The fees can be used to improve the community or provide additional amenities.
Noise Restrictions: Many homeowners associations have noise restrictions. Most HOAs have quiet hours that limit the amount of noise you can make after a set time.
Decrease Clutter: HOAs care primarily about the aesthetic appearance of a neighborhood. As such, it is natural that they will give priority to a home’s appearance. Your home should look as good as everyone else’s. They will limit how much clutter you can display. You should also be aware of any patio furniture, barbecues, or other similar items you may have in your yard.
Pet Regulations: HOAs often enforce a variety of pet rules. This includes the maximum number of pets allowed, the breeds of each animal, pet cleanup laws, and noise levels.
Maintenance Requirements: Many homeowners associations require homeowners to maintain a certain level of curb appeal. This means that each home must meet a set standard. The HOA maintenance requirements typically include maintaining a lawn, siding, driveways, walkways, and other exterior elements.
Respect The Neighborhood: Homes associations emphasize the importance of creating a family-friendly atmosphere. Many rules will emphasize safety and keeping everyone on the right page.
In conclusion
An HOA, can appear different at first glance. It could mean something else to different investors or home buyers. It can be a way to increase neighborhood amenities or create a sense of community. An HOA can be a burden on a property’s budget, or it could cause unnecessary expenses. One thing is certain about HOA properties: they shouldn’t be a burden. If you are looking to buy a property with an HOA, consider the benefits it brings to a community and how that can impact your bottom line.