Considering the United States is home to over 370,000 homeowners associations, it’s only normal to encounter them during the house-hunting process. Many potential homebuyers, though, don’t know what is a HOA and what it does. Buying a home in an HOA does come with certain obligations. As such, buyers must first understand how HOAs work before closing.
What Is an HOA? What Does HOA Stand For?
A homeowners association (HOA) is a legally incorporated organization of homeowners in a subdivision whose mission is to maintain the quality of the community and the value of the homes within it. HOAs are often originally incorporated by the developer of the community to market, manage, and sell the lots in the subdivision. When most or all of the lots are sold, ownership of the association is transferred to the homeowners. The homeowners then become responsible for the management and maintenance of the community.
Are You Required to Join an HOA?
Membership in the association is often mandatory — a condition of the purchase of a home in the neighborhood. With this membership, homeowners are required to abide by the community’s governing documents, which can stipulate certain payment and maintenance obligations, among other things. Similarly, an HOA must abide by its own governing documents as well as any federal or state laws that apply. Some examples include the Fair Housing Act and the Freedom to Display the American Flag Act.
What Is an HOA: Dues and Assessments
As part of their covenant with an HOA, homeowners must regularly pay dues to the association. These dues go towards various things, including the maintenance of the common elements. Most HOAs have common areas, which can vary in form. Some communities have recreational facilities like swimming pools and fitness centers, while others have simple open spaces and entrance signs. Collected dues also cover legal, accounting, insurance, and (sometimes) management fees.
Maintenance Responsibilities: Homeowners vs HOA
In an HOA of single-family homes, individual homeowners are generally responsible for the upkeep of their homes and properties. In townhome associations, maintenance responsibilities can vary — from the HOA performing all exterior maintenance to the homeowner shouldering this obligation to somewhere in between. More often than not, in condo communities, the association is responsible for the maintenance of all exterior and common elements, such as the roof, hallways, and elevators. Meanwhile, condo unit owners are responsible for the maintenance of the interior of their units and exclusive common elements.
The Declaration of Covenants, Conditions, and Restrictions (CC&Rs) establish maintenance and architectural standards guidelines. They also give the board the power to issue violations to any homeowner who is not in compliance. These guidelines can range from not parking on the street to keeping all landscaping neat to setting a standard for the fences in the community. While these restrictions can be a pain to keep up with, they all serve a single purpose: to maintain high property values and enhance the quality of life in the neighborhood.
HOA Meaning: Understanding the HOA Board and HOA Committees
The HOA is overseen by a board of directors consisting of volunteer and unpaid homeowners who their peers elect to run the community. Being a board member is often a time-consuming and thankless job, but most take pride in their community and a job well done.
The board’s responsible for following through with everything laid out in the CC&Rs and bylaws to ensure smooth operations. They collect dues, purchase insurance, enforce the rules, coordinate with vendors, and everything in between.
Aside from becoming a board member, a homeowner may serve the community in other ways, such as joining a committee. These committees can vary from one association to another, though common ones include architectural and social committees.
The Need for Professional HOA Management
Some HOA boards hire a professional management company to aid them in the operations of the community. Running an association takes a lot of time, effort, and expertise, and most boards don’t have these to spare.
With professional management, an HOA manager will work in tandem with the board to fulfill day-to-day responsibilities. These responsibilities can include but are not limited to dues collection, rule enforcement, vendor selection and management, and homeowner communication. Management companies also typically have access to a wide network of trusted contractors that most self-managed associations don’t.
When the HOA board works together with professional management and the community’s residents, they can create a harmonious living environment for everyone.
What Does HOA Mean? Answered!
Living in an HOA comes with several benefits. Residents can use a variety of amenities and take advantage of convenient services. They can also rest easy knowing that curb appeal and property values are continuously protected.
Beyond understanding what is a homeowners association, though, it is also important to know how such a community works. HOA living is not for everyone. Residents have certain obligations to fulfill, including maintenance responsibilities and dues payments. Thus, before purchasing a home, determine whether or not the home belongs in an HOA. If it does, review the HOA’s governing documents to determine if the community is compatible with your needs and wants.