What is an HOA?
Before you purchase a home governed by a homeowners association, be sure you know what will be expected of you. Whether you're a first time homeowner or a homeowner new to an HOA, it can be difficult and time consuming to understand exactly what your responsibilities are and how HOA rules will be enforced.
A homeowners association (aka, HOA) is an organization in a neighborhood, community or complex that determines and upholds a set of rules or standards for its properties and residents. People used to think HOAs are just for condo complexes, but they are becoming increasingly popular in the U.S as people look more and more to maintain a specific quality of life in these communities and protect property values for all homeowners. These associations typically charge homeowners a fee or regular dues to help maintain things like common areas, landscaping or other amenities. You can also be subject to more than one HOA. If you live in a large planned community, there may be separate neighborhood associations plus one master association. This means, of course, that you’ll be subject to more than one fee, although master association fees tend to be paid just once per year.
Who's creates HOA rules and regulations?
An HOA is typically made up of elected community residents who sit on a board of directors. When you purchase a home in a community that's governed by an HOA, you automatically become a member of the homeowners association (and in fact, you are usually required to). The board members tend to have regular meetings open to homeowners to discuss major issues and concerns facing the community. HOAs are governed by bylaws that dictate how the HOA will be run, including when and where meetings will be held, how voting will take place and what member roles and responsibilities will be. The HOA will also create governing documents such as rules and regulations, bylaws, covenants, restrictions and budgets.
HOAs help all homeowners remain equally responsible for shared common spaces such as landscaping, elevators, swimming pools, clubhouses, parking garages, fitness centers, sidewalks, security gates, etc. In addition, HOAs define a set of rules known as covenants, conditions and restrictions (CC&Rs) that all residents must follow. CC&Rs vary from association to association, but guidelines generally deal with architectural features like fences, pools, porches or other exterior home features. Other common restrictions cover things such as line-drying laundry, satellite dishes, pets and restrictions on parking certain types of vehicles. With the increasing interest in short-term rentals such as VRBO and Air BnB, many associations are also putting limitations on the frequency and duration of rentals allowed.
How are HOA rules enforced?
HOA rules are generally legally enforceable and penalties are appointed when violations occur. Consequences can be severe depending on the nature and length of your violation, and can include fines, legal action, or—in the worst cases—eviction. If you openly commit a crime or break a law, the HOA can report it directly to authorities. If you're unable to or refuse to pay your HOA fees, there can be penalties similar to missing mortgage payments. If you run into tough times and are unable to pay your HOA fees, try proactively communicating with your Board of Directors before you miss even one payment. If you want to sell your home and you owe HOA fees you will likely have to pay the back fees before closing, or at a minimum, out of the proceeds of the sale at closing.
- Communities with required HOAs typically provide shared spaces and common areas like pools, clubhouses, sport courts and other amenities homeowners may not be able to afford on their own
- HOAs are generally responsible for maintaining and repairing any shared or common spaces so you can enjoy that pool without having to take care of it!
- HOAs help homes in the community retain their value
- HOAs can mediate conflicts and issues between community members as they arise.
And the cons:
- HOA fees are an additional expense that generally only goes up!
- There are hoops to jump through if you're interested in modifying, renovating or remodeling certain aspects of your home, including painting the exterior the color of your choice or putting up holiday decorations
- You may miss a sense of autonomy and privacy that HOAs control
The final word
In the end, purchasing a home that has an HOA depends on your lifestyle and what you're looking for in a home. Just be sure to read all the governing documents of the HOA before committing to a purchase to make sure they are agreeable to you. Your Realtor should request these documents be available prior to your needing to sign any purchase & sale agreement so you'll have time to investigate and digest, and make an informed decision about purchasing!