An Introductory Guide to Homeowners Associations
June 22, 2023
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What You Should Know About HOAs
What is a Homeowners Association (HOA)?
If that’s a question you want to know more about, you’ve come to the right place.
An HOA is a self-governing organization that oversees communities where homeowners pay fees to maintain the units or the neighborhood.
Obviously, though, there’s a lot more to it than that.
In this article, we’re going to talk about what an HOA is, some basic guidelines of an HOA, and provide a general overview of what to expect if you live in one or join an HOA board.
An HOA board is the body of people that govern the HOA. They’re usually unpaid volunteers. They make sure rules are followed, fees are collected, the community is clean, and standards are maintained.
An HOA can oversee different kinds of properties like houses, condominiums, apartments, and more. HOAs often function differently depending on the specific community. That said, most HOAs have board meetings to discuss updates on the community and report violations or next steps.
Fees and bylaws vary from HOA to HOA. For example, just because one HOA has a certain hour at which everyone must be quiet doesn’t mean that’s the case for a different HOA.
If you buy a property that’s in an HOA, then you’re immediately a member in that community. This means you must adhere to the bylaws and rules of the HOA and allow property inspections. You’ll also be able to vote for board members.
Inspections are a key part of living in an HOA community. The board wants to ensure every property keeps its value or increases in value.
But what exactly do these inspections include?
- Structural Components: Inspections typically start with the foundation and the walls. Inspectors want to ensure there aren’t structural issues with the property. If repairs are necessary, and depending on the HOA, tenants may be responsible, or the HOA may cover the costs.
- Wood Decks and Patios: Mold and termites can cause major issues with wooden structures like these. Thus, a critical part of any inspection is checking for these issues.
- Electrical Supply Boxes: This check also involves electrical lines on your property.
- Roofs: This is a very thorough part of any inspection because roof leaks can be very dangerous. Fixing leaks as soon as possible is a priority for most HOAs if they find them.
- Floors: Large cracks and uneven flooring are the main concerns here. Both can cause injuries if they’re not attended to.
- Air Conditioning and Heating: Air conditioning must be inspected regularly. It’s critical that the A/C is in working order. Heaters, including the hot water heaters, must also undergo regular inspections.
- Additional Utilities: Inspections also typically cover things like phone lines, gas lines, and water lines. Leaks in any of these can cause massive issues, so it’s important to make sure they’re working properly.
Another part of every HOA is fees. The fees are critical because they keep the community running and support the property value of each home in the community.
HOA fees usually contribute to an array of services. Some potential examples include:
- Garbage Disposals
- Pest Control
- Snow Removal
- Fitness Centers
- Swimming Pools
Many HOAs also charge extra fees for certain repairs (I.e., roof replacements). It’s important to understand an HOA’s rules and expectations if you decide to move into one.
Most HOA fees typically range from $100 to $2,500 per month. However, not all communities fall into this range. Every HOA is unique, so that’s part of the reason it’s key to learn about the specific HOA you’re considering.
The fees for an HOA depend on several factors. Examples include:
- Kind of Property
- Number of Properties in the HOA
- Operating Expenses
Lastly, it’s important to mention that part of your monthly dues goes toward the HOA’s reserve fund. An HOA reserve fund is typically used for large projects or emergency repairs for shared spaces. If the HOA cannot afford a project, it can issue a “special assessment” (e.g., added bills) to gather the necessary funds.
What Happens if Someone Doesn’t Pay HOA Fees?
If an HOA gives out a warning and someone still doesn’t pay their dues, then the board can take serious action. These actions may involve:
- Liens: If the HOA puts a lien on a property, the lien can appear in title searches, which makes it harder to sell a property.
- Collections: If the HOA sends overdue account to collections, it can negatively impact tenant credit scores.
- Lawsuits: In certain states, the HOA can sue someone for unpaid dues. This could lead to wage garnishment or a levy against bank accounts.
- Foreclosure: In certain instances, the HOA can foreclose on a property depending on state laws and regulations.
Common HOA Rules
HOA rules are also known as covenants, conditions, restrictions (CC&Rs).
Most of these rules relate to the appearance of properties. The board wants to keep a consistent aesthetic because it maintains order and safeguards property values.
Most HOAs set rules for components including:
- Roofing Materials
- Lawns and Gardens
- Fences, Sheds, and Pools
- Holiday Decorations
- Property Cleanliness
- Paint Styles and Colors
Many HOAs also create rules related to:
- Noise restrictions
- Pet Breeds Allowed
- Renting Properties (I.e., Airbnb)
Assessing an HOA
If you’re a potential tenant, it’s important to vet an HOA before buying a property in one. You don’t want to end up in a poorly managed community.
Here are some things to consider before purchasing a property in an HOA:
- The HOAs financial Condition: You want to join an HOA that has abundant cash in a reserve fund. And be sure to ask if they withdraw from the fund often and if there are projects that will need funding soon.
- What the HOA Fees Cover: How often are fees charged? What is the penalty for late payments? What kind of notice will you receive if they raise rates? Do the fees work with your budget? You’ll want to figure out the answers to questions like these before you make a final decision.
- The HOA’s Relationship with Current Homeowners: Talk to neighbors or look at social media to find out what’s going on in the community. Are there any disputes or ongoing issues? A thorough online search or a conversation can shed light on what you may be walking into.
- The HOA’s Rules: If the rules clash with what you want, consider looking elsewhere for somewhere to live. For instance, if you want a large dog and this community forbids it, then it may not be the right fit for you. Take a careful look at the rules to decide if they align with your values.
If you’re willing to relinquish some autonomy, HOAs can provide a good place for you to live. And, if you want to oversee an established community and help maintain a certain aesthetic, managing an HOA may be a great option for you.