HOA is one of the many acronyms you need to know in the real estate industry. The term is used quite often, particularly in neighbourhoods. In case you are not familiar with it, here is a brief explanation of the HOA meaning:
The homeowners association, commonly referred to as HOA, is a private organization within a community that establishes rules for its members and properties. Generally, its members are elected homeowners who live in the neighbourhood, collectively known as the board of directors.
The first homeowners association started in the United States around the mid-19th century. It served as an advertising tool for land developers during that time. But things have changed since then, and the HOA is definitely different now.
As of today, HOAs are often formed by property developers in an effort to create a peaceful environment and streamline operations. A homeowners association is a wonderful way to keep your neighbourhood up to date and improve its quality. They also serve a variety of purposes, from community events to maintaining common areas and much more.
To learn more, let’s check out some of the most important bits of information about homeowners associations. Starting with their functions, then discussing their pros and cons.
What is the function of HOA?
The main function of the HOA is to oversee the entire community. It can be summarized from that perspective since they develop rules and regulations for their residents and the properties within their neighbourhoods.
To put it simply, homeowners associations usually carry out the following things:
- Handle maintenance: A homeowners association takes care of the common areas of a residential community. Such areas may include hallways, swimming pools, parks, and play areas.
- Financial management: HOA dues are collected from members and used to maintain the areas owned by the association. It could be anything from landscaping common areas to operating a gym. There will also be funds for major fixes like roof repairs and parking lot resurfacing.
- Organize meetings: The association holds meetings to keep all members informed about changes or issues concerning the community. This may include everything from building new facilities to planning neighbourhood celebrations.
- Examine complaints: HOAs serve as mediators in disputes between neighbours. When two neighbours disagree over an issue, they can approach the association. Then, they will look into the matter and offer suggestions on how to resolve it.
- Handle documentation: The association manages necessary documentation. This includes covenants, conditions, and restrictions (CC&Rs), which specify rules for the community.
- Establish rules and regulations: The board of directors sets guidelines for the community. In some cases, this can include landscaping requirements and even curfews. Although some of the standards can be restrictive, the majority are meant to benefit the residents and properties.
The best way to understand how homeowners associations function is to view them as a mix of homeowner associations and municipalities. As with any municipality, they can establish rules and regulations that apply to their communities, but they also have responsibility for maintaining the common areas.
What are the Pros of Having HOA?
An effective HOA brings a lot of benefits to the community. Here are some of the advantages you may experience from having an HOA:
- Preservation of property value: HOAs have a set of standards when it comes to home improvements and exterior maintenance. Members are then responsible for adhering to these guidelines. It keeps the neighbourhood neat and makes it more appealing to live in. As a result, property values are preserved since everything is in check.
- Keeping up common areas: The association takes care of communal areas such as the entrance, lobby, and hallways. They also look after certain amenities so you can enjoy them without having to worry about their maintenance.
- Improved sense of community: When a neighbourhood is managed by a homeowners association, residents have a greater chance of getting to know each other and becoming involved in the community.
- Resolving a dispute: The homeowners’ association is responsible for settling disputes that arise between themselves and the community. They listen to all parties involved and then work to solve the problem in the best way possible.
- The community has little to no nuisances: The rules and regulations are clearly outlined for members to follow which ensures all goes smoothly. Some restrictions include noise policies, parking regulations, and others.
What are the Cons of Having HOA?
There is no doubt that HOAs can provide you with certain benefits with regard to your personal and property rights. However, there can also be disadvantages. Some downsides of having an HOA include:
- It can be quite costly: HOAs usually charge an initial fee and monthly dues, which may increase over time. It can be challenging, especially when you’re working with a limited budget.
- They limit your freedom: Some of the guidelines established can be restrictive and feel overbearing. In order to paint your house, for example, you will need to get permission from your HOA first. In some cases, you might be charged for it or they might not approve it at all.
- An HOA can have too much power: Homeowners associations can impose fines on owners who violate their rules and regulations. Then, members must comply, especially if they are actually proved responsible for such an act.
- Subject to uniformity: When it comes to the outside of your home, you can’t change anything since the association wants everything to be uniform. For instance, you cannot do your favourite landscape design or even grow a specific flower. HOA has a strong desire for uniformity, which can sometimes be problematic.
On the surface, homeowners associations are meant to help homeowners work together in a cooperative manner. In this sense, they’re meant to contribute to the neighbourhood and improve it.
How Much is HOA Fee?
HOA fees vary widely, but in most cases tend to range from $200 to $300 a month. In general, this is decided by the board of directors based on a variety of factors. The maintenance costs, contingency funds, and salaries of staff are some aspects to consider.
Furthermore, the way your house was constructed might also be a factor. The HOA may charge you for the provision of services that do not directly relate to the maintenance of the property. There may also be other charges. To avoid being surprised by the expenses you’re about to incur, it’s best to speak to an HOA member about such things. The HOA fee will then be determined accordingly.
What Happens if You Don’t Pay HOA Fees?
Failure to pay the HOA fees will result in a notice demanding payment or a suspension of your rights as a member. It may also require you to pay within a certain period of time, or face late fees or interest charges. There are other consequences you could face, so make sure you know what happens if you don’t pay HOA fees.
In the worst-case scenario, you could even be legally sanctioned if the association filed a lawsuit against you. If this happens, depending on the state where you live and the specifics of your situation, you may be responsible for attorney fees or other legal costs related to collection efforts.
Can You Disregard Being Part of HOA?
Yes, you can disregard being a member of a homeowners association. Keep in mind, however, that the process can be lengthy. This is especially since the area you will be living in is governed by them. Furthermore, you may want to find out beforehand whether or not can you refuse to join a homeowners association. This is because some HOA’s require membership. This can become an issue when you have purchased a property, signed an agreement, but fail to follow the rules later on.
The bottom line is that homeowners associations can make sure everyone in your neighbourhood gets along and behaves responsibly. HOAs have been proven to be an asset to upstanding communities. However, it is essential to take note of some of the potential drawbacks of these organizations.
Ultimately, it will still be up to you whether you wish to be part of an HOA. Be sure to weigh the pros and cons before signing any agreements or even purchasing property in the area. Furthermore, you need to carefully read the terms and conditions so that you are not caught off guard when certain things occur.