HOAs are private organizations that establish legally binding regulations regarding the use of your property and that of your neighbors.

Contrary to their portrayal in popular culture, HOAs are not always overly strict and controlling suburban entities. HOA fees contribute to the upkeep of the neighborhood and amenities such as landscaping and parks. According to a 2022 study conducted by the Foundation for Community Association Research, the majority of Americans who live in community settings, including HOAs, express satisfaction with their living arrangements. In fact, 89% of residents rated their overall experience as good, very good, or neutral, while 68% believe that the community rules help preserve and enhance property values.

If your only exposure to HOAs has been through sitcoms and memes, it’s time to set aside any preconceived notions. After all, your discontent may be directed towards the landscaping policy!

How do HOAs truly operate, and what questions should you ask before becoming part of an HOA community?

An HOA is an organization that governs a neighborhood or multi-unit building by creating and enforcing rules for its residents. These rules help establish a harmonious living environment and are overseen by a board of directors elected from within the community.

But is this arrangement as burdensome as it sounds? Not necessarily. When everyone understands the guidelines, you have support in case of disputes with your neighbors, whether it’s a noise complaint, a pet-related issue, or even a passive-aggressive disagreement over parking spaces.

HOAs are financed through fees paid by residents. They are commonly found in housing developments where there are shared spaces or amenities, such as planned communities, subdivisions, gated communities, condominiums, townhome complexes, and certain apartment buildings.

Are you required to join an HOA?

Not always. Some HOAs operate on a voluntary basis, giving residents the choice to join and enjoy access to shared amenities like clubhouses or pools. However, mandatory HOAs enforce membership for residents who wish to live in the community. This means adhering to the bylaws and paying the required fees.

By understanding the ins and outs of HOAs, you can make informed decisions and find the right community that aligns with your preferences and lifestyle.

What are HOA fees?

HOA fees are dues that members pay to access the services and amenities managed by the association. Typically charged on a monthly basis, some associations may opt for quarterly fees instead.

Each association determines the specific services provided to the community and the corresponding fee structure.

How much do HOA fees cost?

HOA fees can vary widely, ranging from less than $50 to over $500 per month, depending on the housing style and amenities offered. According to the 2022 Foundation for Community Association Research survey, the most common range reported by residents was $101 to $300 per month.

It’s important to note that fees can increase over time. In a recent survey conducted by the Foundation for Community Association Research, 91% of association professionals, board members, and consultants reported unexpected expense increases due to inflation, with 73% planning to increase assessments.

What do HOA fees cover?

HOA fees generally cover the maintenance and upkeep of common areas and amenities, including walkways, parks, lighting, elevators, pools, clubhouses, and gyms. Additionally, these fees may fund community services such as lawn care, landscaping, maintenance and repairs, snow removal, trash pickup, security, pest control, and insurance for common areas. HOA fees can also contribute to organizing social events like cookouts or holiday parties.

A portion of the monthly HOA dues is often allocated to the HOA’s reserve fund, which covers anticipated maintenance and major projects, as well as emergency repairs for shared spaces. In cases where the reserve fund is insufficient, HOAs may issue “special assessments” or additional bills. It’s important to note that HOAs have the authority to raise fees with board approval.

Are HOA fees mandatory?

Yes, HOA fees are indeed mandatory, similar to any other bill. While there is typically a grace period for payment or accommodations for financial hardship, non-compliance with fee obligations may lead to warnings or late fees. The HOA board also possesses the authority to restrict access to shared amenities for members who are delinquent in their payments.

What happens if you don’t pay HOA fees?

If you receive a warning and still fail to pay your dues, the HOA board can take more severe action. This may include:

• Collections: If your HOA sends your outstanding account to collections, it can negatively impact your credit score.
• Liens: If your HOA places a lien on your property, it can appear in a title search and make it challenging to sell your house.
• Lawsuits: The HOA can legally sue you for unpaid dues in certain states. This could result in wage garnishment or a levy against your bank account.
• Foreclosure: In certain cases, your HOA may have the ability to foreclose on your property based on its covenants and state laws.

How do HOAs work?

The HOA’s board of directors is responsible for:

• Organizing regular meetings.
• Establishing and maintaining budgets.
• Vetting and hiring vendors, such as landscapers.
• Overseeing the reserve fund for special projects.
• Planning events or social activities.
• Enforcing the community’s rules, such as issuing warnings or fines.

Do HOA board members get paid?

HOA board members are volunteers and typically do not receive compensation, despite the considerable amount of time and energy they invest. This is why some boards delegate work to professional HOA management companies.

HOA management companies

An HOA management company appoints a professional community manager to provide business advice and administrative support to the HOA. In return for their services, the management company charges a fee to the HOA board. Personality clashes can occur, so this arrangement may cause friction if the community manager and the board do not have a good working relationship.

HOA Rules

HOA rules, also known as covenants, conditions, and restrictions (CC&Rs), play a vital role in maintaining the aesthetics and property values of a community. These regulations primarily focus on the appearance of houses, aiming to create a consistent and appealing neighborhood. Here are some common aspects governed by HOA rules:

1. Property Appearance: Standards for paint colors, roofing, siding materials, lawns, gardens, landscaping, fences, sheds, pools, driveway or street parking, outdoor and holiday decorations, and overall tidiness are set to ensure a visually harmonious environment.
2. Community Conduct: HOA rules also cover acceptable behavior within the community, addressing concerns such as noise restrictions, pet regulations, smoking policies, renting out properties (including long-term tenants or short-term rentals like Airbnb), and business use of properties. While these rules can help maintain a peaceful atmosphere, they may restrict certain personal preferences and activities.

It’s important to note that HOAs possess legal authority to enforce these rules. In case of violations, the HOA takes appropriate disciplinary actions, which can range from issuing warnings and imposing fines to limiting access to community facilities or even pursuing legal action against homeowners. However, HOAs must abide by state and federal laws, including the Fair Housing Act.

Points to Consider Before Buying a Home in an HOA Community

If you’re considering purchasing a property in an HOA community, it’s crucial to conduct thorough research and assess the management quality. Here are some key factors to evaluate before making your decision:

1. Financial Condition: Evaluate the HOA’s financial stability, including the availability of sufficient funds in the reserve account. Inquire about past instances of reserve utilization and upcoming projects requiring funding.
2. HOA Fees and Coverage: Understand the frequency of HOA fee payments, late payment penalties, and any scheduled fee increases. Assess whether the amenities and services provided align with your lifestyle and if the fees fit your budget.
3. Disputes with Homeowners: Seek information about any ongoing disputes or issues within the community. Neighbors and online sources can offer insights into potential problems, such as noise complaints, parking violations, construction defects, or misappropriation of HOA funds.
4. Community Rules: Carefully review the CC&Rs to ensure they align with your values and expectations for your ideal home. Rules that impose restrictions on pets, exterior paint colors, or children’s play structures should be considered before making a commitment.

Weighing the Benefits of HOAs

Living in an HOA community isn’t suitable for everyone. When properly managed, HOAs can effectively preserve property values by maintaining an attractive environment. However, if HOAs suffer from high fees or poor management, they can become a bureaucratic burden for homeowners. Ultimately, living in an HOA-regulated neighborhood requires a willingness to adhere to rules and fulfill financial obligations.

Regardless of where you choose to reside, rules and responsibilities will be part of the package. Living in an HOA community, particularly one with effective management, can offer tangible lifestyle benefits. Just ensure that you’re comfortable with relinquishing some autonomy and meeting financial obligations promptly.

Contact Sword Mortgage To Learn More About Your Options

Call (770) 757-5750 or complete our online form to speak with a loan expert at Sword Mortgage to get help navigating your options and find a loan that fits your needs today.