What is a Homeowners Association (HOA)?

A homeowner association (HOA) sets and enforces regulations for residents and properties in a subdivision, planned community, or condominium structure. Buyers of property in a HOA’s jurisdiction instantly become members and must pay HOA fees. Some organizations restrict members’ property use, while others allow more.

Homeowner Associations’ Function

Homeowner associations primarily arise in areas with single-family houses or multi-unit structures like townhomes or condominiums. An HOA serves to set and enforce property restrictions within its jurisdiction. Residents form and operate associations. Membership is frequently required to buy a home in a HOA-governed neighborhood.

An HOA board of directors, or governors, is typical. These elected groups enforce HOA rules.HOAs often outline their regulations as restrictive covenants in a Declaration of Covenants, Conditions, and Restrictions document. CC&Rs provide property upkeep requirements.

Architectural constraints like fences and landscapes may apply. But they may also involve minor aesthetic considerations like house paint color. The CC&R may include consequences for breaking the rules contained within the agreement. Penalties may include costs or compelled cooperation. In extreme instances, lawsuits may result.

Fees for homeowners associations

Some HOAs have enormous financial and legal control over their local property owners. HOAs charge monthly or yearly fees. The following things affect these fees:

• Type of property
• Group property count
• Location
• Available amenities
• Operating costs

Luxury communities might charge $10,000 monthly, while most charge just $200 to $400.

HOA payments frequently go to the reserve fund for extensive renovations or emergencies. In addition to standard fees, HOAs may charge residents extra assessments for unanticipated repairs on common facilities like sidewalks or parking lots if the organization has sufficient reserves.

HOA boards frequently manage money. Fund collection and management are its responsibilities. Along with setting dues and levies, the board can punish homeowners who breach regulations or damage common spaces. HOAs can impose penalties and even a lien on a property if homeowners fall behind on their dues.

Not clearing HOA debts might make selling the house harder.

HOAs, community associations, and property owner associations

Incorporated HOAs are common. State laws apply to them. Some states distinguish HOAs from condominium-based HOAs (condominium communities) and co-op boards.

This difference assumes these groups have different property interests. “Community Association” refers to HOAs, condominium complexes, and co-op boards.

HOAs differ from homeowner associations. This organization is a general term for people who desire to improve their neighborhood and property values. Property owners’ associations can include non-homeowners who care about the community’s real estate, unlike HOAs.

The Foundation for Community Association Research estimates 358,000 U.S. HOAs in 2021. The foundation, a trade or lobbying group, says 74.2 million Americans live in community association neighborhoods or properties.

Homeowners Association (HOA) Pros and Cons

Advantages

For its members, the HOA establishes rules. Our guidelines strive to preserve and enhance the community’s property values. The requirements frequently focus on appearance, including property cleanliness, condition, and maintenance. HOA standards usually help create a unified appearance for all properties in the association’s zone.

In exchange for HOA payments, management usually offers additional services. All HOA members can use these amenities:

• Landscaping
• Parking lots
• Swimming pools
• Tennis courts
• Party spots
• Snow removal

Specific HOA fees may include garbage pickup and utilities.

HOAs represent self-governance and democracy to some people theoretically. The assumption that residents are better at managing a community than landlords may explain this belief.

Disadvantages

The expensive association costs of a HOA may dissuade some purchasers. Some residents desire to modify their houses, yet HOA restrictions may appear unfair, arbitrary, or excessively restrictive.

HOA board members, often volunteers, may lack the training to manage real estate, handle complicated financial difficulties, or unite diverse groups for a shared purpose. While HOA leadership must obtain consensus on upkeep and renovations, confrontations may arise among disagreeing members.

Pros

• Set and enforce community rules
• Maintain property values
• Offer services and facilities
• Let people control themselves

Cons

• Charge fees, dues, and assessments
• Maintain stringent rules
• Inefficiently operate
• Unprofessionally run

Homeowners Association example

Individual homeowners may fight HOAs. Solar panel installation is a contentious topic. Many HOA boards dislike them because they lower property values. They can prohibit homeowners from installing them in 23 states.

An electrical engineer in Blaine, Minnesota, requested permission to install solar panels in his home in 2020—October of that year. The HOA denied his request due to aesthetic issues (the panels were too visible from the street) and the bylaws’ lack of rooftop solar requirements.

The electrical engineer joined a coalition of homeowners and solar enthusiasts, urging Minnesota senators to approve a measure enabling homeowner associations to regulate but not ban solar thermal systems in single-family houses. In early 2021, the Minnesota House of Representatives introduced one of several identical pieces of legislation that had failed to pass since 2014.

Homeowner associations cover what?

A homeowner association manages a multi-party real estate development, like an apartment complex. HOAs oversee building upkeep, decide on major renovations, and write and enforce regulations.

HOAs collect $200–$400 monthly fees to finance operations. They can also penalize people who break community ordinances.

Pros and Cons of Homeowners Association (HOA) Membership

Owners benefit from HOA management services. Without an HOA, apartment building owners must negotiate building-wide waste pickup, maintenance, and community regulations. Residents may spend a lot of time, and owners may fight. However, HOAs can cause issues if owners disagree with community ordinances or spending decisions.

Which legal powers do HOAs have?

Different HOAs have different legal authorities based on their design. Homeowners Associations (HOAs) can set and enforce community restrictions, including smoking, pets, and rentals. HOAs set building budgets and impose monthly or one-time fees. HOAs can punish members who refuse to pay fees or follow community bylaws. These sanctions often include fines, community privilege restrictions, and lawsuits.

The Verdict

Homeowners have various rights and obligations. You may be a homeowner association member if you own a townhome, condo, or community. These communities frequently handle property upkeep, utilities, landscaping, and snow removal, making them helpful to homeowners. These groups might restrict what you can and can’t do with your land.

Conclusion

• A homeowner association sets and enforces subdivision, planned community, and condominium bylaws.
• HOA members are subdivisions, neighborhoods, or building inhabitants.
• Zoned property buyers must join some communities.
• A board of directors runs homeowner associations, which collect monthly or yearly fees for common area and facility maintenance.
• Homeowner associations may penalize non-compliant homeowners.