What is HOA? For many first-time homeowners, the term “HOA” might sound familiar yet seem foreign at the same time. What is an HOA, and what does HOA mean? Let’s find out.
What Is HOA? What Does HOA Stand For?
Many prospective homeowners will hear the term “HOA” and not understand it. The abbreviation “HOA” stands for homeowners association. However, others will use the term community association or property owners association, depending on the context. Some also use these terms interchangeably.
What is a homeowners association? It is an organization in a planned community, townhome, subdivision, or condominium building that handles upkeep and rule enforcement. HOAs ensure that property values remain high and that properties within the community are attractive to buyers.
What Does a Property Owners Association Do?
Homeowners associations are self-governing organizations run by community homeowners. The homeowners typically elect an unpaid board of directors from the community’s residents. These board members oversee HOA management, maintenance, and rule enforcement.
A set of rules and bylaws governs every HOA. All homeowners need to obey these rules. Otherwise, they may face penalties and other consequences for rule violations. The rules exist to maintain order and aesthetic appeal. For example, some HOAs may restrict the color of paint a homeowner can use on their exterior homes. Many HOAs also impose rental restrictions, pet restrictions, and parking rules.
Apart from the rules, homeowners also need to pay HOA fees. The HOA collects these fees for maintenance work such as landscaping, cleaning, and upkeep of common areas like pools, clubhouses, and parking spaces. They also pay fees to cover the cost of insurance, employee wages, capital improvements, and resident services.
How Do HOAs Begin?
An HOA typically begins when a developer creates a planned community. The developer often creates a homeowners association by creating governing documents such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, and Articles of Incorporation. Many developers also incorporate homeowners associations as non-profit organizations.
Every homeowners association has a leadership team called the board of directors. Initially, the developer appoints the board members. However, as the developer sells homes to buyers, the homeowners eventually elect the board members.
How Do You Join an HOA?
The moment someone purchases a home in a homeowners association, they become a member of the HOA. They automatically agree to abide by the community’s governing documents and pay their annual dues.
What Are HOA Fees?
Every member of the HOA must pay HOA fees. These fees, sometimes called HOA dues or assessments, are used to pay for the HOA’s expenses. What does an HOA cover when it collects these fees? Here are some of the ways an HOA uses the collected fees:
- Repairs and maintenance of common areas
- Services such as trash collection, snow removal, and security
- Professional HOA management services
- Reserve funds for major renovations or emergency repairs
- HOA insurance
Apart from regular HOA fees, homeowners associations may also impose special assessments. These are often used to pay for emergencies when the HOA lacks enough reserve funds. On top of these fees, an HOA may also charge fines and penalties for breaking the rules or non-payment of assessments.
Is Rule Enforcement Legal?
What are homeowners associations able to do legally? Are they allowed to force homeowners to follow the rules? For many homeowners, an HOA’s rules may seem restrictive and overbearing. However, homeowners associations generally have the legal authority to enforce the rules.
This is because the governing documents typically have the force of law in a homeowners association. Typically, the HOA files and officially records these documents with the state. Buyers who purchase a home in an HOA agree to abide by the governing documents. Failing to abide by the rules and financial obligations can have devastating consequences.
One of the common consequences of failing to meet obligations is fees. HOAs can charge interest on unpaid balances and impose monetary penalties. Sometimes, the HOA can suspend a homeowner’s rights and privileges. In extreme cases, HOAs may file a lawsuit or place a lien and foreclose homeowner property.
On the other hand, how much power an HOA has will depend on state law and the specific language in the governing documents. They are also bound by specific laws such as the Fair Housing Act and the Americans with Disabilities Act.
Pros and Cons: Should You Join an HOA?
What is a HOA community like to live in? There are many advantages and drawbacks to living in an HOA. What is HOA like to live in? Here are some things to consider before you jump in.
Pros
- Regular Upkeep. Homeowners associations are often clean and well-kept. Because of the community’s maintenance efforts and curb appeal, property values will likely remain stable or increase.
- Amenities. Many HOAs provide amenities such as pools, playgrounds, and gyms, which homeowners can use for leisure activities.
- Dispute Resolution. HOA boards can often resolve disputes between neighbors through dispute resolution mechanisms. They can also resolve property-related conflicts that violate the rules.
- Convenient Services. Homeowners associations often provide convenient services. They may cover the cost of specific utilities, security, or garbage disposal.
Cons
- HOA Fees. Assessments and dues can be expensive and stretch a homeowner’s monthly budget. Moreover, they typically increase as time goes on to adjust for inflation and rising costs.
- Restrictive Rules. Some HOA rules, such as rental caps or architectural standards for home aesthetics, may feel restrictive to homeowners.
- Disputes Over Administration. Not all homeowners will agree on management methods. The board of directors and homeowners may squabble about handling certain issues.
- Improper Management. Poor HOA management can lead to more trouble than benefits. An inept or inefficient board might neglect its duties or make costly financial decisions, especially if they’re unequipped to run a community.
Living in a Planned Community
What is an HOA? Now that you know what it stands for, it’s important to weigh the benefits and disadvantages of living in a planned community. HOAs certainly provide many perks, but they also come with certain obligations that only some are prepared for.
Do you need a professional HOA management company? Personalized Property Management offers premier management services in Southern California. Call us today at 760-325-9500 or contact us online for more details!