A homeowners association, or HOA, is a private organization created by homeowners in a neighborhood or development to manage and maintain common areas. The purpose of an HOA is to ensure that the property values of all homes in the area remain high by maintaining common areas and enforcing covenants, conditions, and restrictions (CC&Rs).
Homeowners associations are typically governed by a board of directors elected by the membership. The board is responsible for hiring a property management company to handle day-to-day operations, such as landscaping, repairs, and enforcing CC&Rs.
This blog post will explain everything you need to know about homeowners associations, including how they work, their benefits and drawbacks, and what to do if you live in an HOA.
What Is a Homeowners Association?
A homeowners association, or HOA for short, is a group of people who own homes in the same neighborhood or development. These associations are typically created to help maintain common areas and amenities within the neighborhood and enforce rules and regulations that all homeowners must abide by. HOAs can also provide a sense of community amongst neighbors and be an excellent resource for information and assistance.
Individual houses, townhouses, high-rises, or condos can all be part of an HOA, and the HOA’s obligations vary depending on the type of property. For example, an HOA for a condo complex might be in charge of the entire property, whereas an HOA for a townhouse community might be in charge of the common areas.
An HOA’s properties are governed by collective rules and bylaws that the association enforces. Among these is the need that each property owner pays HOA fees, which support the use and upkeep of common areas such as swimming pools, parks, communal lawn maintenance, and parking lots and roadways.
These laws and taxes for maintenance aid in maintaining the community’s aesthetic, cleanliness, homogeneity, and stable property prices.
What Are the Legal Rights and Responsibilities of a Homeowners Association?
Depending on how they were created, individual HOAs will have varying levels of legal authority. HOAs will, in general, have the legal ability to establish and enforce community bylaws, such as whether smoking, pets, or rentals are permitted in the building. HOAs will also be in charge of setting the building’s budget and will be able to levy monthly or one-time fees to their members. HOAs can apply various sanctions if a member refuses to pay these fees or follow the community’s bylaws. These punishments might involve monetary fines, community privilege restrictions, and even legal action in many circumstances.
In addition to their legal rights, HOAs also have several responsibilities. First and foremost, HOAs must use their power to be democratic and fair to all community members. They are also required to maintain the property’s common areas in a habitable state and follow all building, safety, and fire codes. HOAs should also be proactive in communicating with their members, informing them of changes or updates to the community.
What Is an HOA and What Does It Cover?
A homeowner association (HOA) is a non-profit organization tasked with overseeing multi-party real estate development operations, such as an apartment complex. HOAs ensure that the building is well-maintained, selecting whether or not to undertake major remodeling projects and creating and enforcing the bylaws. HOAs charge their members monthly HOA fees to fund their operations, typically from $200 to $400 per month. HOAs can also enforce the community’s bylaws, such as levying penalties on residents who do not follow them.
HOA Fees and Expenditures
Depending on the amenities offered by the community, homeowners can expect to spend anywhere from $200 to $2,500 or more each year in HOA taxes and fees. (At the most basic level, there may be no amenities.)
At a bare minimum, homeowners must pay their share of the association’s operating costs, which can include:
- Maintenance and landscaping (including pest control)
- Garbage pickup
- Shared utilities (e.g., in common areas)
- Safety and security
What Are the HOA’s Rules and Bylaws?
Request a copy of the HOA’s bylaws and the Covenants, Conditions, and Restrictions, or CC&R, document, which describes the community’s restrictions, from your real estate agent before you offer a home. You might be able to get this information on the internet as well, and you should carefully read each document to see if you can live with the HOA’s guidelines.
Some HOAs, for example, impose restrictions on the number of plants you can have in your front yard or the height of playground equipment and require prior clearance for home expansions or a new roof. Other laws may prevent you from renting your home for a short time through Airbnb or another website, which can be problematic if the place is a rental property or if the income is used to help pay the mortgage on your principal residence.
Pros and Cons of HOAs
There are several pros and cons to living in a community with a homeowners association.
- Your property value will benefit from more stability due to standards governing the maintenance and look of homes.
- You might have access to private amenities like a swimming pool, playground, clubhouse, gym, or on-site security (however, this might be confined to just you as an owner, not your guests) (although, this might be limited to just you as an owner, not your guests).
- An HOA board will hear and arbitrate neighborly conflicts over property-related concerns that violate HOA bylaws (e.g., barking dogs, trashed yards, or fence disputes).
- You may have more opportunities to mingle with neighbors in various neighborhoods at HOA social events.
- HOAs have a lot of control over keeping your home and living in it. You may be restricted in your design choices, paint colors, or even the amount of pets you can have.
- HOA costs can strain your monthly housing budget, especially if home prices in your neighborhood are already high.
- Some HOAs can be harsh when issuing violation notices for minor offenses.
- Failure to follow HOA rules or pay dues can result in a fine or a lien being placed on your property.
- You might not be able to get on the HOA board or have a voice in how the community is run.
What Is the Status of the HOA?
HOAs are often controlled by a board of homeowners who live in the community, but others are managed by a real estate developer or property manager. When problems arise, it’s critical to get a sense of how attentive those in control are. If the HOA has a meeting coming up, it may be worthwhile to attend to understand how things are managed.
Remember that serving on the HOA board is a commitment few people are willing to make. Hence the same board members are frequently reelected. If the board and incoming residents disagree on an issue, this might lead to conflict.
Find out if a board has been formed for the development if it is relatively new. The developer usually retains control until a certain number of units have been sold.
Example of a Homeowner Association
Individual homeowners occasionally have disagreements with their HOAs. One complicated issue is the installation of solar panels. HOA boards frequently dislike them, thinking that they will depreciate property values, and in 23 states, they have the authority to prohibit homeowners from installing them.
An electrical engineer in Blaine, Minnesota, a Minneapolis suburb, requested permission to install solar panels on his home in 2020. The HOA, however, denied his proposal in October of that year, citing aesthetic concerns (the panels were too visible from the street) and the lack of specified rooftop solar rules in the association’s bylaws.
The electrical engineer is part of a coalition of homeowners and solar activists urging Minnesota legislators to approve a bill that would allow homeowners associations to restrict but not prohibit the installation of solar thermal panels on single-family houses. It was introduced in the Minnesota House of Representatives in early 2021, and it is one of several similar laws that have been submitted but never passed since 2014.
If you’re considering purchasing a home in a neighborhood or development that has an HOA, it’s essential to understand the rules and regulations that will be in effect. You should also be familiar with the services and amenities that the HOA provides and the financial obligations that you’ll be responsible for as a homeowner. Ask questions and get to know your potential HOA before deciding to ensure it’s the right fit for you.