HOA or Homeowner Association - What is an HOA?

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What exactly is an HOA or Homeowner Association? Who benefits from an HOA? Who is required to have an HOA? What kind of services does an HOA provide?

The HOA or Homeowner Association

An HOA or Homeowner Association is a legal entity created to manage and maintain the common areas of a community. Typically these "common areas" consist of things like pools, clubhouses, landscaping, parks, streets and roads.

HOAs can consist of single family homes, condominiums, or town homes and are typically setup by the original developer of the community with a set of rules called "Declaration of Covenants, Conditions, and Restrictions" otherwise known as "CC&Rs".

One of the primary functions of the HOA is enforce and ensure that these "CC&Rs" are adhered to by the individual homeowners. The guiding principals of these regulations are normally to help maintain property values and the quality of life within the community.

Common Attributes of an HOA

  • HOAs are normally non-profit corporations with a set of bylaws and the authority to enforce those bylaws, including things like architectural and design standards.
  • Membership is normally mandatory for all property owners.
  • Mandatory monthly dues are normal and periodic special assessments are not uncommon.
  • Monthly fees can vary from less than $50 to hundreds of dollars per month.
  • There is usually an elected board of directors who normally consist of volunteer homeowners.
  • Many HOAs hire a property management company (usually picked by the board of directors) to do things like maintenance, bookkeeping, and dues collection.
  • Many Home Owner Associations have an HOA Website to communicate effectively with their members.

Typical Services Performed by a Home Owner Association

  • Collect monthly dues from homeowners and maintain financial statements.
  • Enforce the deed restrictions or CC&Rs for things like: exterior home improvements, general exterior condition of property such as paint, how properties can be used, and even noise control.
  • Maintain landscaping in the common areas.
  • Provide snow removal.
  • Maintain recreation facilities such as clubhouses and pools.
  • Provide security services.
  • Organizing regular activities and meetings for residents.
  • For More Info see this article: HOA Maintenance-Who Has Responsibility for What?

Before Buying a Home in an HOA community

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  • Thoroughly read and examine the CC&Rs that govern the community and make sure you can live with and abide by them.
  • Find out when the most recent audit or financial review was done. Get a copy of the financial statements and have a person such as a lawyer or accountant examine them to make sure there is nothing irregular.
  • Find out what the monthly dues are and make sure you can afford them.
  • Find out if a reserve study has been done for repair or replacement of major common-area components, such as swimming pools, decks, asphalt surfaces, concrete areas, fencing, monument signs and roofs and how the reserve requirements are funded.
  • Find out if there is any litigation pending against the HOA.
  • Determine the last time and how often dues have been raised.
  • Find out if there are any special assessments pending.

Is an HOA right for you?

No doubt, living in an Homeowner Association governed community is not for everyone. People who are against HOA's cite things like: mandatory fees and assessments, too restrictive rules, and unilateral authority with no room for recourse. Those in favor of HOA's generally cite the fact that HOA's protect the property values of individual homeowners, create a great community environment, and provide essential services like security and recreational facilities.

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Source: Neighborhood Link, CAI
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