What is an HOA?
A Homeowners' Association is typically a nonprofit organization formed by a group of homeowners within a residential community, such as a neighborhood, condominium complex, or planned development. The primary purpose of an HOA is to manage and govern the community by establishing and enforcing rules and regulations that aim to maintain the community's appearance, property values, and overall quality of life for its residents.
Some common responsibilities of an HOA may include:
- Collecting and managing fees or dues from homeowners to cover communal expenses like landscaping, maintenance of common areas, security, and insurance.
- Enforcing community rules and regulations, such as architectural guidelines, noise restrictions, and pet policies.
- Maintaining common areas like parks, swimming pools, and recreational facilities.
- Resolving disputes and conflicts among homeowners.
- Managing finances and budgets.
- Organizing community events and activities.
HOAs can have both positive and negative aspects. On the one hand, they can help maintain property values, promote a sense of community, and ensure that common areas are well-maintained. On the other hand, some homeowners may find the rules and fees imposed by HOAs to be restrictive or burdensome.
It's important for prospective homebuyers to carefully review the rules, regulations, and financial obligations of an HOA before purchasing a property within a community governed by one, as these can vary widely from one HOA to another.
What is an HOA fee, and what does it cover?
HOA fees are the dues that each community homeowner must pay to cover amenities and the maintenance of all common areas. Fees range widely, starting as low as under $200 per year to thousands of dollars every month. The average cost of an HOA is estimated at about $170 monthly.
HOA fees help to cover:
- Costs of shared amenities
- A reserve fund for large expenditures, such as resurfacing a parking lot
- Special assessments that may be required for large, unexpected one-time expenses, such as making repairs after a flood
What amenities do HOAs provide?
The amenities provided by an HOA differ according to the decisions made within each separate organization. The more amenities, the higher the costs. The following are among the most popular amenities covered by HOA fees:
- Fitness centers
- Swimming pools
- Golf courses
- Parking garages
- Community events
- Centers for retirees
Services such as trash removal, landscaping, and building maintenance in shared spaces may also be provided by an HOA.
What rules and regulations are associated with HOAs?
It is always important to find out the details about a particular HOA. Review the HOA’s bylaws as well as its Covenants, Conditions, and Restrictions—documentation commonly referred to as the CC&R—which outlines the rules of the community.
Read the CC&R to determine whether you want to live under the community’s rules. For instance, you may be required to get approval for any additions you make to your home or even before replacing your roof. Sometimes an HOA prohibits the freedom you might otherwise have to rent out your home.
What if you break the CC&R?
As you carefully review a community’s CC&R, pay special attention to the consequences of breaking the rules. Punishments vary, and associations are all run somewhat uniquely. Usually, any violations or late payments first receive a polite reminder by mail and perhaps later in person. Most violations are resolved in this way. However, you could be charged a one-time fine or your fine may involve a fee for each day in which there was a violation. One form of punishment for breaking HOA rules is banning you from using common areas
What happens if you don’t pay your HOA fees?
Failing to pay your HOA fees is one of the ways in which you break community rules. Typically, when you miss a payment, you will be charged interest and late fees. You are subject to being sued for unpaid HOA fees. In most cases, HOAs are able to put a lien on your house due to unpaid fees. The rules of the community may make it possible to foreclose on your home.
How are HOAs run?
HOAs operate in various ways. It is most common that an HOA is run by a board of volunteer homeowners who live in the community, and the board members are typically voted in by fellow HOA members. Sometimes, though, a real estate developer or property management company runs HOAs.
What are the Pros & Cons of an HOA?
The Pros of HOAs may include:
- Home value may be increased.
- The neighborhood is consistently well-maintained.
- Amenities often make HOA fees worth the cost, providing perks such as swimming pools, gyms, snow removal, a clubhouse, playgrounds, on-site security, and opportunities to socialize with neighbors.
- Disputes between neighbors involving property-related issues can be handled by an HOA board.
The Cons of HOAs may include:
- The HOA fees could put too much of a stretch on your household budget.
- The HOA board has an option to hike membership costs.
- Special assessments could further increase the cost of an HOA membership.
- Restrictions can potentially infringe on many freedoms, including such things as the color and style of your mailbox, the number of guests you can entertain, and whether you can hang a flag from your porch.
- Homeownership can be at risk because foreclosure may be possible if you can’t meet HOA requirements.
What are some of the reasons people regret buying property in an HOA?
Buying property that requires HOA membership may not be for you if:
- You hate being told what you can and can’t do.
- You enjoy things that are not approved by most HOAs, such as working on cars in your driveway.
- You want your home exterior to have a unique appearance.
- You prefer to have no strings attached to home ownership.
- After your mortgage has been paid off, you don’t want to pay HOA fees.
What are the top reasons people love living in an HOA?
A home in an HOA community may be a perfect fit for you if:
- You appreciate uniformity and order.
- You are highly tolerant of rules and regulations.
- You will make good use of the amenities and services provided by your HOA.
- The track record of your HOA is that property values consistently increase.
- You feel good about going home to a community that always looks beautiful.
Real estate agents can help you by looking for houses only in neighborhoods that do or don’t have an HOA, depending on your preference. Or, if you aren’t sure, real estate professionals can help you sort out whether a particular HOA fits your needs and your budget.
What is HOA management?
HOA stands for homeowners association. HOA management pertains to the governance and handling of matters the HOA board members take care of on behalf of the HOA community. The board members are volunteers, and the demands of the job can easily become overwhelming
What do HOA management companies do, in general?
HOA management companies oversee HOA operations and supervise the upkeep of common areas and amenities. Basically, an HOA management company helps the HOA board members to more easily carry out the duties their community members have entrusted them with.
What are some of the specific duties of an HOA management company?
The responsibilities handled by an HOA management company are determined by the needs of the HOA board members. However, the following are among the duties commonly handled by HOA management companies:
- Facilitate and attend board meetings
- Advise board members
- Create agendas for board meetings
- Send notices about HOA meetings
- Take meeting minutes
- Organize community functions and events
- Oversee repairs and maintenance
- Collect bids from vendors
- Routinely inspect the community
- Keep records of requests for maintenance or service
- Collect dues, fines, and assessments
- Send invoices
- Manage payables
- Manage HOA insurance coverage
- Provide escrow assistance
- Prepare reports such as monthly financial statements
- Provide legal advice pertaining to HOA matters
What is the fee structure of an HOA management company?
There is no set pattern for an HOA management company to collect fees for services rendered. The fee structure from one company to the next is rarely identical. That being said, typical types of fees charged by an HOA management company include start-up fees, ongoing management fees, and exit fees. More details follow:
Start-up fees differ according to the size of the community and what aspects of daily management will be included in the agreement. In small communities, the initiation fee might be, for example, $2,000. Larger communities require a heavier workload at the time of start-up, and the fee might be upwards of $30,000 or more.
The ongoing management fee is paid by the HOA, and the payments are usually made on a monthly basis. The amount paid is negotiated before the contract begins. In exchange for management services, typical charges amount to around $10 to $20 per unit each month. The size and location of the community are factors considered in establishing the fee amount.
Exit fees are paid when an HOA terminates the services of an HOA management company to switch to a different HOA manager. The fee is charged for purposes of helping with the process of transition. Exit fees vary significantly, and the amount typically depends upon the management company’s policies.
What are the top reasons to rely on professional HOA management services?
HOA board members are volunteers who rarely have experience in matters specific to HOA management, and few have the time required to handle matters properly. Professional management companies can be invaluable resources, and the following are a few of the benefits they can provide:
- Legal knowledge is necessary to run an HOA. Professional HOA property management companies possess legal know-how and familiarity with the laws and policies pertaining to HOAs.
- For an HOA to be successful, uniformity of rule and regulation enforcement is essential. The consistency provided by an HOA management company ensures that matters are handled without bias or favoritism.
- Homeowners are kept informed of updates and have the benefit of clear and easy-to-understand HOA policies when matters are handled by an HOA management company.
- Vendor management is a key issue among HOAs. Management companies are particularly skilled and equipped to foster healthy working relationships between vendors and HOAs.
- Maintaining open lines of communication between board members and homeowners is crucial to fulfilling the goals of an HOA, but rarely can board members make themselves available 24/7. HOA management companies have the tools and experience necessary to provide round-the-clock communication.
How do HOA management companies help with vendors?
A common complaint that vendors have when working with HOAs is that their invoices are often not paid in a timely manner. HOA board members frequently hear these and other vendor complaints. For example, the vendors may not be paid accurately, or they may charge excessive late fees when they are not paid on time. HOA management companies make use of sophisticated online systems that vendors can directly submit invoices into, speeding the payment process.