When searching for a new home, you may find that many desirable communities have homeowner associations (HOA) in place. This shouldn’t deter you from purchasing a home in your favorite neighborhood—there’s a lot to love about entering a community that features an HOA.
Of course, homeowners have to understand what benefits they receive from an HOA, as well as the rules they must follow when they agree to join. If you’re new to living in a community that has an HOA, you have a lot to learn. Here are a few basics that every newbie should be aware of before hiring real estate agents to scout potential property purchases.
The HOA is generally governed by a board comprised of volunteer homeowners that works alongside a management company. Although there are self-managed HOAs, wherein the board governs all affairs for the community with no help from a management company, it is usually easier and safer to work with experienced and professional community managers.
The HOA has many duties. First and foremost, this group is tasked with collecting monthly assessments (dues) paid by each homeowner and managing them for the benefit of the community. The HOA must demonstrate fiscal responsibility in funding reserves, hiring vendors, and otherwise allocating funds on behalf of residents.
Generally, the HOA takes on responsibility for maintaining common areas within the community, including landscaping, pools, clubhouses, private roads, fences and gates, and so on. The HOA may also cover exterior repairs to units.
In addition, the HOA must make and enforce rules for the community. In some cases, these rules are mandated by federal or state laws. However, the community may also make their own rules and regulations, known as CC&Rs.
The HOA board and managers must also hold regular meetings, manage a budget, make decisions about the community, penalize homeowners that break the rules, deal with legal issues within the community, and listen to homeowner questions, concerns, and complaints.
As a homeowner, you are expected to understand and abide by all rules for the community, as spelled out in the Covenants, Conditions, and Restrictions, or CC&Rs. These are the rules and restrictions that govern your community.
CC&Rs generally cover any type of behavior that affects the community. For example, your CC&Rs could include restrictions on how many guests you’re allowed to bring to the pool area, or whether or not you’re allowed to paint the exterior of your home or condo.
You may only be allowed to have holiday decorations up during the month of the holiday. You may not be able to rent your property without permission. CC&Rs may limit your ability to alter your property or conduct certain activities within the community, so it’s important to read and understand your obligations under CC&Rs before you purchase property in a community with an HOA. The best estate agents should be able to help you procure a copy of the rules before you buy.
Every member of the community is part of the HOA and help fund its activities. Homeowners must pay monthly assessments for the benefits the board provides. Whereas the average homeowner might pay for their own landscaping, exterior maintenance and repairs, roof replacement, and so on, these things are generally covered by the HOA, which is why monthly dues are necessary.
Assessments will vary by community, as the best Realtor can tell you. There are, however, rules concerning how much the HOA can increase rates annually. In extreme circumstances, such as natural disaster scenarios, the HOA board and managers may be allowed to levy special assessments for very specific reasons, such as to deal with community-wide problems not covered by insurance, like termites or flooding, for example.
Joining the Board
As a homeowner in the community, you are welcome to volunteer to serve on the HOA board. You will have to declare your candidacy and be elected to the board during annual community elections, in which all members of the community vote.
If you are not elected, you can still volunteer for special committees, which only deal with certain aspects of community management. For example, you could serve on a committee that makes decisions about landscaping without actually becoming an elected board member. The board has the power to appoint committees without a vote by the community.