What is the Purpose of an HOA?

First Time Home Buyer Tips

What is the Purpose of an HOA?

January 28, 2022

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If you have experience in the real estate industry, then you’ve probably heard about homeowners’ associations before. However, hearing about HOAs and living under them are two very different things. HOAs usually have a lot of rules, fees, and perks that you won’t exactly know about without buying a property with an HOA. This blog post defines what HOAs are, what it’s like to live under them, and provides the pros and cons of having an HOA.

What is a Homeowners Association?

A homeowners association (HOA) is a group that establishes and enforces regulations in an attempt to uphold and improve the value of housing communities such as condominiums, townhomes, and single-family houses within a development.

The regulations of a Homeowners association are generally outlined in an agreement known as a Declaration of Covenants, Conditions, and Restrictions (CC&R).

When you buy a home under a Homeowners association, you instantly become a member, which means you agree to follow the regulations and pay HOA fees.

How Does an HOA Work?

Usually, homeowners associations are created by the original developers when a new community is built. After buyers move into a predetermined amount of the properties, the developers hand over the responsibilities of the HOA to the members of the community. As more buyers move into the community, they automatically agree to the HOA’s by-laws and governing documents, which ultimately means that the buyers are agreeing to be members of the HOA.

All members are required to pay annual or monthly HOA fees that go to improving the living conditions of the community. Many buyers end up joining HOA communities without having a full understanding of what they do or how they will affect them as homeowners.

Three Different Types of Homeowners Associations

There are three types of HOAs that exist for different types of properties. Each of them come with different rules and perks.

Condominium HOAs

A condominium (otherwise known as a condo) is similar to owning an apartment. The decor of your condo is yours, while the exteriors and all shared spaces are owned by the Homeowners association.

Every member is able to vote on who sits on the HOA board, who manages the funds, and who enforces the CC&R.

Condominium HOAs have the strictest rules. From governing where you can park your vehicle to the colors of your roller window blinds and the seasonal decorations you are allowed to put up. Condos don’t allow for a lot of individuality and with HOAs they allow even less.

On the bright side, the maintenance and overall responsibilities of the gyms, sports facilities, parking lots, storing units or any other shared spaces are managed by the Homeowners association.

HOAs for Townhouses

A townhouse is a single-family home with two or more stories and at least one side that is shared with another house. Townhouses are most frequently found in metropolitan areas with limited living space and high prices.

Townhouse HOAs normally offer similar services and benefits to condominium HOAs. However, townhouses typically have less space than condos. Townhouses also have an exterior yard that you are in charge of taking care of while condos do not. HOA communities are meticulous with the presentation of the outside yard, even sometimes measuring the grass to make sure it’s up to code.

Townhouse communities usually contain pools, clubhouses, gyms, and more, which are all managed by the HOA.

HOAs for single-family homes

Homeowners associations historically are linked to condos and townhouses. However, it’s not uncommon nowadays to also see HOAs associated with single family homes in developed neighborhoods.

Certain Homeowners association communities have gateways or security staff to ensure safety. There are amenities like a communal pool, a town hall, gym, parks, and even a golf club that are all managed by the HOA board.

As a homeowner, you’re accountable for the maintenance of your lawn, driveway, porch, and overall exterior in a normal suburban Homeowners association. Any major renovations done to your houses exterior needs to first be approved by the HOA board before the project begins. In wealthy districts, HOAs could be incredibly strict regarding the dos and don’ts of the residential community. Generally, interior renovations do not need approval by the HOA and are not of the concern of the association.

The Typical HOA Commmunity Rules

HOAs are responsible for setting regulations and ensuring that the homeowners in their area follow them. Homeowners are obliged to enter into a contract with the HOA when they first buy one of their properties, stating that they will adhere to the HOA’s guidelines.

The restrictions imposed by each community association differs. Personal regulations, on the other hand, may cover a wide range of topics, from mailbox types to if you are permitted to own a dog. Many of the HOA rules fit into one or more of the following categories:

Fees

Fees will be consistent for all homeowners who choose to reside in an HOA-controlled area and the fees must be paid. The homeowner association fees are used to improve the area and the shared facilities.

Noise Limitations

Many HOAs have a restriction on noise level that must be adhered to. Several HOAs also enforce quiet hours at a specific period of the day. Along with noise, HOAs restrict any nuisance that can disrupt a homeowners right to have quiet enjoyment. Nuisances can be noise, odors, fires, and pests.

Reduce Clutter

HOAs are mainly focused on the general look of the neighborhood, therefore the curb appeal of a house is their main priority. They expect each house to be organized, groomed, and free of clutter.

Rules for Pets

HOAs may try to limit the amount of pets you can have and the specific breeds of a pet as well. They also can enforce anti-tethering laws, and proper cleaning practices.

Requirements for upkeep

Many HOAs demand and enforce houses to have a certain level of curb appeal. Yards, fences, driveways, sidewalks, and porches are expected to be continuously maintained under HOA rules.

Rules for Safety

The necessity of a family-friendly atmosphere is frequently emphasized by homeowners’ associations. As a result, many of the regulations will be centered on ensuring everybody’s safety and staying on the identical page.

Regulations for Rentals

HOAs can put a lot of restrictions on homeowners renting out their property. Some HOAs ban the practice completely. This is especially true for condo units.

What Are The Pros And Cons of HOA?

HOAs may seem like a hassle to deal with as a homeowner but there’s a reason the amount of associations have grown over the years. While it may seem unfair for an organization to restrict what you can do with your property, many homeowners appreciate the focus on the general curb appeal and tranquility HOAs can bring. Here are some of the pros and cons of having a Homeowners association.

The Pros of Having an HOA

HOA Takes Care of General Upkeep. Although the fees that you pay to an HOA can be a bother, they help you in the long run by going to the shared facilities that the entire development enjoys, going to your repairs and maintenance when it comes to the exterior of your house, and takes care of local cleanup or snow removal.

HOAs Can Increase The Value of Your Property. A 2019 study revealed that detached single family houses under a Homeowners association sold more than ones without one by 4%. You could credit this to the focus on curb appeal or the appeal of having an HOA oversee the neighborhood to buyers. Whatever the reason, the uniformity that all of the houses have under an HOA must be a factor in that statistic.

HOAs Are The Mediators For Neighborly Disputes. Whether it’s about noise, pets, or an encroachment, the HOA board members will handle the conflict for you. They will even go as far as to fine or take legal action to resolve the conflict if need be.

HOA Fees Cover Many Utilities. HOAs take the responsibility of many basic utilities such as gas, water, sewer, trash, and recycling, which are all included in one HOA fee either per month or year.

The Cons of Having an HOA

The Fees. HOA fees can vary from $100 per month to $1000. On average, HOA fees land around $200 to $300 per month, which adds up to a hefty price every year.

HOA Rules Can Get Excessive. The long list of rules and regulations of what you can do with your own property can seem ridiculous to many home buyers. They can also get extremely technical where even the dimensions of a garden needs to be approved by the community association. The benefits of an HOA may not outweigh the drawbacks if rules and regulations are a deal breaker for you.

HOAs Have A Lot of Power. HOAs can and most likely will enforce their rules and regulations on all homeowners within their community. The consequences of not following the rules can be extremely dire. On the other hand, an HOA managed poorly not only affects the shared facilities in a negative way, but also affects every homeowner that are in the development.

How Does a Homeowners Association Enforce The Rules?

As already mentioned in the cons section, HOAs creates rules and regulations which are put into place to make the community safe and comfortable for the residents. Like any governing body, the HOA also enforces these rules in three main ways.

1. Fines 

HOAs can levy a fine on any homeowner who fails to comply with the guidelines put into place by the association. The amount of the fine is shared with the homeowner in the governing documents shared at the time the homeowner first becomes part of the residential community.

2. Can Revoke Your Rights 

When living in a community controlled by the HOA, homeowners get to enjoy certain benefits. However, if homeowners fail to comply with the guidelines set in place by HOA, the association can revoke certain rights and privileges such as usage of the gym, pool, etc.

3. Taking Legal Action 

Offenders who fail to comply with the regulations even after multiple warnings by the HOA are bound to face legal action by the association. Since the homeowners are in a signed agreement, the HOA is well within its rights to take a formal, legal action.

In the worst-case scenario, the HOA has the power to place a lien on your name against the outstanding fines, and can even foreclose your home. In such cases, the HOA needs to provide a notification to the homeowner for the violation and their intent to place a lien on the property.

Summing it up

As you can see, there are many pros and cons to living under an HOA. The association takes care of some of the most common and tedious tasks which many homeowners would find extremely beneficial. However, the fees and rules can be a huge negative based on your wants and needs. Now that you understand what HOAs are you can make an educated decision if the property you are interested just so happens to be in a homeowners association.