What Is HOA?

What is HOA? HOA stands for homeowners association. But, what is a homeowners association and why do communities have them? Here is a guide to help you better understand the purpose of an HOA in a community.

In this article:


What Does HOA Mean?

The main reason for creating a homeowner association is to increase property values. Through maintaining communal areas and enforcing HOA rules and regulations, property values can go up immensely over time. These keep the overall community looking nice and keep the home somewhat cohesive.


How Does an HOA Start?

After a developer creates a community, they usually create a homeowners association that acts as a non-profit organization. Similar to other non-profit organizations or corporations, there has to be a leadership team to run the HOA, which in this case is called the Board of Directors.


How to Join an HOA?

be part of it | what is an hoaWhen an individual or a family buys a home in the residential community, they automatically become a member of the homeowners association. When the community starts to grow, the developer hands over full control of the association to the residents.

The homeowners then elect a qualified Board of Directors who are interested in overseeing the community and its operations.


Are HOAs Legal?

Every homeowners association has its own governing documents. These documents include CC&Rs, bylaws, rules and regulations, and ARCs. Governing documents shape how the community functions.

For instance, it outlines the powers and responsibilities of the HOA Board of Directors. It also states the rights and responsibilities of homeowners. All of these help protect the community’s property values.

HOA communities still have to follow their local, state, and federal laws. For instance, communities cannot enforce rules that go against the Fair Housing Act and the Americans with Disabilities Act.


What Are HOA Rules and Regulations?

HOA rules and regulations vary from different associations. Most of the policies within the guidelines deal with architectural enjoyments such as fences, pools, porches, and other exterior home additions.

When buying a home in a homeowners association, most people place value on the house and its surroundings. They want to be proud of their communities’ appearance. This way neighbors that don’t care or don’t have the time, must cut their lawn and make sure the exterior of their home is acceptable and attractive.


Are There Benefits of Living in an HOA?

The biggest advantage of a homeowners association is the shared common areas within the community. Most associations have pools, clubhouses, volleyball courts, and other fun amenities that one could not afford on their own. Luckily, anyone living in the community can take advantage of these comforts.

Having an HOA board is also a benefit of living in an HOA. The board ensures that homes and communal areas are beautiful and well-maintained. As a result, homes in HOA communities typically enjoy higher and more stable property values.


What Are the Disadvantages of Living in an HOA?

Close up of old English dictionary page with word disadvantage | what is an hoaIn an effort to increase or stabilize property values in the community, homeowners will have to abide by the strict rules and regulations imposed by the HOA.

These rules are outlined in the community’s CC&Rs, bylaws, or governing documents. This means that homeowners cannot alter the exterior of their property however they want. They have to abide by architectural standards that dictate design schemes, paint colors, and so on.

It can also be expensive to live in an HOA community because of the fees you have to pay each month. This can be a strain on homeowners’ expenses, especially if the HOA is not properly managing the community. Homeowners can also receive notice violations and fines for not following the HOA rules and regulations.


What Are HOA Fees?

In exchange for joining a community, homeowners are required to pay HOA fees each month. HOA or condo association fees are used to pay for the upkeep and maintenance of shared common areas. It is also used to pay for common utilities such as garbage disposal, water and sewage, and electricity. The fees also cover other HOA expenses such as insurance, HOA management fees, and reserve contributions.


How Much Are HOA Fees?

HOA fees will vary for different associations. On average it is about $200-300 per month, but this value can increase depending on several factors. For example, a community with plenty of amenities will have higher upkeep costs, which will then result in higher HOA fees.

The amount can also be higher if communities have large-scale projects in the pipeline or if the association is trying to replenish its reserve funds. The HOA Board prepares an annual budget to determine the amount of HOA fees to be collected.


What Happens If You Don’t Pay HOA fees?

If homeowners do not pay their dues on time, the HOA Board or management company can collect late fees or penalties. These are necessary to keep the community’s budget on track. Depending on the community’s bylaws, homeowners who do not pay HOA fees may be restricted from communal areas until they are able to settle their debt.

A homeowner who continuously does not pay HOA fees can be declared delinquent. In extreme cases, the HOA can place a lien on the delinquent homeowner’s property or file for a foreclosure to settle unpaid dues.


What Are Reserve Funds?

Reserves on Ring Binder. Blurred, Toned Image. | what is an hoaWhen homeowners pay their association fees, a percentage of that amount goes to the HOA’s reserve funds.

Reserve funds are like a savings account; it is used to fund large-scale maintenance such as roof replacements and pavement resurfacing, as well as capital improvement projects such as a new playground or amenity. Reserve funds cannot be used for operational costs and other community expenses.


Do Homeowners Pay a Special Assessment?

A special assessment is a one-time fee levied on homeowners. Special assessments are usually collected when the HOA does not have enough money in its reserves to cover large and unexpected expenses.

For instance, a roof replacement happens every 20 years. However, if it is damaged by a storm before that, the HOA might not have saved enough. Since a roof is a necessary feature, the HOA will levy a special assessment to cover the costs of a roof replacement.

Special assessments will depend on the state’s laws and the community’s bylaws, but generally, homeowners are required to pay them. Just like HOA fees, there can be fines and consequences if homeowners refuse to pay the special assessment.


A Better Understanding of What Is an HOA

By now, you have a clear answer to “What is HOA?” Residents like to see a well-put-together area where they live and call home. Ultimately, a homeowners association is in charge of the upkeep and safety of the neighborhood. They make sure the residents are happy.



Back to Top