Before buying a house that belongs in a homeowners association, it is imperative that you first familiarize yourself with how these associations work. After all, living in an HOA community is not for everyone.
In this article:
What Is a Homeowners Association?
A homeowners association is an organization that governs a planned development, condominium building, or subdivision. These associations create and enforce rules with the main purpose of protecting property values.
Every homeowners association is bound by its governing documents. These include homeowners association bylaws and the Declaration of Covenants, Conditions, and Restrictions (CC&Rs). It is run by a group of volunteer members, known as the HOA Board of Directors, who assume their position usually through an election.
Membership is typically mandatory once you buy a home in an HOA community. Once a member, you must adhere to the association’s rules and regulations as well as pay a monthly fee known as HOA dues. Failure to abide by these rules and pay your dues can result in a number of consequences.
Understanding Homeowners Association Fees
Members of homeowners associations must pay regular dues, usually charged on either a monthly or annual basis. These payments go straight to the HOA’s operating and reserve funds.
The association uses its operating fund to pay for various day-to-day expenses, such as the cost of maintenance, repairs, landscaping, and other services. The reserve fund, on the other hand, is set aside for future major replacements or repairs as well as unanticipated expenses.
HOA dues vary from association to association. Typically, you should expect to pay around $200 to $400 a month, but the location, type, and size of the association can greatly influence this amount. In higher-end communities, members even pay monthly dues of $10,000 or more.
Are HOA fees negotiable? The short answer is no. When you become a member of an HOA, you automatically agree to pay monthly dues. Granted, some states impose a limit as to how much an HOA can increase dues every year. And some associations also allow members to enter into HOA payment plans for special cases. In general, though, you can’t negotiate your dues.
If you default on your dues, your HOA may charge a late fee (after sending a warning notice) and even take you to court. In some cases, associations can even file a lien on your property and then foreclose on that lien to collect unpaid dues.
Additionally, homeowners associations are normally granted the ability to charge special assessments to their members. The need for such assessments usually arises when unbudgeted costs come up, when the reserve fund can’t cover certain expenses, or when too many homeowners fail to pay their dues. It is worth noting that some states have laws regulating exactly how much an association may charge in special assessments.
What Are Homeowners Association Rules?
Members of a homeowners association must also follow the rules and regulations of the community. You can find these rules within the association’s CC&Rs, and HOAs also expound on these covenants by creating operating rules. Covenants are hard to amend and typically require a majority vote from the membership, whereas operating rules usually only require a vote from the HOA board.
Covenants and rules exist to keep the community in order. Some of these rules are restrictive, meaning they limit what you can do with your property. Not all associations have the same covenants and rules, though. Therefore, you must not assume that your experience living in one HOA community will automatically apply once you transfer homes. Typical HOA rules have to do with architectural changes, maintenance requirements, occupancy limits, parking restrictions, and pets.
Rule compliance is mandatory in homeowners associations, and not even board members are exempt. If you violate a covenant or rule, you might face a monetary fine or have your member privileges suspended.
While an association’s covenants and rules are legal and binding, you may run into some unenforceable HOA rules every now and then. A rule is considered unenforceable if it conflicts with federal or state laws, was enacted improperly, or is enforced in an arbitrary or selective manner.
For example, if your California HOA has a no-pets policy, then it would be in direct violation of the Civil Code Section 4715, which protects your right to keep at least one pet. Though, your HOA can still impose certain pet rules, such as requiring you to keep your pet on a leash at all times.
The Responsibility of Obtaining Insurance
As a homeowner, insurance is one of your top concerns. But, you might wonder how your homeowners association plays into insurance responsibilities. While it is true that HOAs must maintain proper insurance coverage (usually by state law), most only insure the common areas. Your monthly dues usually cover the cost of these premiums.
When it comes to insurance for your own property, though, you typically need to pay for that yourself. Shop around for the right homeowner’s insurance and make sure your policy covers all of your possessions inside the unit as well. That includes your flooring, windows, appliances, and more. Still, it is worth checking your state laws and your association’s governing documents to understand your insurance responsibilities.
The Pros and Cons of Joining a Homeowners Association
Not everyone can get used to living in a homeowners association. If you are still unsure about whether or not to join one, consider the pros and cons below.
Advantages of HOA Living
Homeowners associations have significantly increased in popularity since the 1970s. Today, these communities are 351,000 strong. But, what is it exactly that makes these associations so attractive?
First of all, these associations give you access to a variety of amenities and services. While not all associations offer the same perks, many have community pools, clubhouses, and gyms. You can expect even more amenities, such as private parks and tennis courts, in luxury communities. Associations also provide services like trash collection, snow removal, and landscaping.
While it may not seem like it on a surface level, the existence of covenants and rules is another benefit of HOA living. Many of these rules serve the purpose of maintaining the appearance of the community as well as the quality of life in it. When houses in a neighborhood look similar and uniform, it contributes to curb appeal and helps protect property values. The same can be said for rules that require you to maintain your lawn or park your vehicle in a certain place.
If you have ever lived next to someone who loves to blast loud music at 3 in the morning, you won’t encounter the same problem in an HOA community. Most of these associations have rules that promote the quiet enjoyment of your property. If you happen to get into an argument with a neighbor over a rule, the association can also step in to resolve the matter.
Disadvantages of HOA Living
It is easy to label monthly dues and the existence of rules as disadvantages of living in an HOA community. But, as you know, both dues and rules serve an overarching purpose.
Of course, there is a chance that an association’s rules may be too restrictive or downright unreasonable. And that can certainly make HOA living a nightmare.
Beyond that, though, the main drawbacks of homeowners associations usually have to do with the people that manage them rather than the idea of HOAs itself. If an HOA board consists of incompetent or ill-intentioned people, then the members will obviously suffer. Some associations are also grossly mismanaged, and there have been cases of fraud and embezzlement in many communities.
Still, the facts are clear. According to a CAI report, 89 percent of members are satisfied with their association and board. With that many happy residents, the benefits of homeowners associations certainly outweigh the drawbacks.
It is not that difficult to understand how a homeowners association works and why it exists. Evidently, these associations serve an important purpose — to maintain property values. As a homeowner, the value of your property should definitely come as a priority, especially if you intend to sell it down the line.
The idea of having to pay monthly dues and follow rules, though, might not sit well with you. For this reason, you must consider all aspects of HOA living and decide whether or not it is right for you.
Managing a homeowners association is harder than it looks. This is why many turn to an HOA management company like Elite Management Services. Call us today at (855) 238-8488 or contact us online to request a proposal.
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