Article Courtesy of YAHOO.COM
Published September 17, 2016
As you search for your next home, you'll hear the term "HOA"
tossed around when talking about a specific house or neighborhood. It may appear
trivial as you hunt for a home with the right number of bedrooms and enough
outdoor space, but take heed because this seemingly small detail can have a
significant impact on the neighborhood, the changes you can make to your home
and the monthly cost of living.
The HOA you hear about is a homeowners association: a group made up of all the
homeowners in a defined area, run by a board of neighbor volunteers that
oversees services such as the maintenance of common areas and snow removal and
establishes and enforces community rules. The Community Association Institute
estimates about 68 million people in the U.S. live under a community
association, which includes HOAs, condominium associations, townhomes,
master-planned communities and cooperatives.
All HOAs are nonprofit corporations initially created by the developer who
establishes the subdivision. To have his or her plan approved by the local
municipality, a developer often agrees to form an HOA, which collects monthly
dues from homeowners in the community for infrastructure costs -- such as street
and sewer maintenance, trash pickup and street lights -- that would otherwise
fall to the municipality. Depending on the size of your community and its
amenities, monthly HOA fees can be as low as $50 per home and reach beyond
As the creator of the HOA, the developer establishes a declaration, which "is
sort of like the constitution for the community association," explains Andrew
Fortin, senior vice president of external affairs at Associa, a homeowners
association management company.
Following the declaration, the developer typically sets initial bylaws that all
homeowners living under the association must abide by. These rules may include
requirements for payment of dues, restrictions on lawn ornaments on a property
or guidelines for the use of any neighborhood amenities, including a park or
community pool. "They'll adopt rules and bylaws that govern [for example] how
you can paint your house," Fortin says.
Once enough homeowners have entered the community, the developer leaves
management of the HOA to a board of community volunteers who are elected to
discuss and propose changes to bylaws, establish the annual HOA budget and hire
outside assistance for a community manager to oversee maintenance, field
feedback from residents and attend to other projects.
Tied to the Land
As a condition for the development of land, all homes built under the HOA are
forever tied to the association. So if you purchase a home in a community with
an HOA, you're tied to it as well.
"Prior to me buying in a community association, I get, or the seller is required
to give me, a stack of documents related to that association. So I get a copy of
the declaration and the bylaws and the budget, and all the things that are going
to be relevant to me in assessing if this is going to be the right community for
me," Fortin says.
Steven Tinnelly, managing partner of Tinnelly Law Group, a California law firm
that represents community associations headquartered in Orange County, explains
that purchasing a home under an HOA automatically requires you to pay dues and
abide by both current and future bylaws established by the HOA board.
In California, for example, in the same way a bank can pursue foreclosure when a
homeowner doesn't pay his or her mortgage, "the associations have that same
power" when a homeowner hasn't paid dues or otherwise owes the HOA money,
If you find yourself owing money to the board for another reason -- because you
damaged a fence or sign, for example -- you're liable for those costs.
"Let's say a homeowner does something to damage the common areas. The
association has to fix it, and then go after the homeowner to recover those
costs," Tinnelly says.
Defined HOA Power, Restrictions
Most states have laws clearly defining the role of an HOA, often adopted from
recommendations in the Uniform Common Interest Owners Act, created by the
Uniform Law Commission, a nonpartisan group of attorneys that established the
general legislation for HOAs in the 1970s and have regularly maintained it since
then. The uniform law includes guidelines for holding HOA board elections and
what bylaws may or may not prohibit.
"It's very comprehensive," says Dawn Bauman, senior vice president of government
and public affairs at Community Associations Institute. "Then some of the states
adopt certain versions of that. They don't usually adopt it wholesale because it
can be quite cumbersome."
Even with states defining an HOA's autonomy and restrictions, some homeowners
naturally oppose their community association. And in some cases, if state law
guarantees the HOA rights that an individual doesn't agree with -- like
preventing you from parking on the street overnight or painting your house a
bright color -- it becomes proposed state legislation rather than a fight
between the homeowner and their association.
According to CAI, an average of 1,000 to 1,500 pieces of legislation regarding
community associations are introduced each year in the U.S.
"What we often find is when someone is unhappy with their community association,
working with that community association might not be their first choice of
effort," Bauman says. "They may choose to go to their legislator and say, 'Oh my
gosh, this is awful and ridiculous and crazy, and you should stop this.' And
that can be very compelling for a legislator when they don't understand the
Involvement and Satisfaction Under HOAs
Even with the significant amount of legislation to change association law and
the pitfalls of HOAs, dissatisfied residents make up a minority of the national
HOA population. In a March 2016 survey by CAI, 65 percent of community
association members reported their experience living in an association was
You have to follow the rules and pay dues, but that doesn't mean you can't
advocate to make changes to your HOA. All board members are neighborhood
volunteers, so why not run for a seat in the next HOA election?
Regardless of whether you intend to be a leader in an HOA, it's important to
learn about the association you'll be joining, as well as your rights and
responsibilities as member before you close on the home. Take the time to read
through the association's declaration and bylaws, and utilize resources provided
by organizations like CAI that advise on the technical skills of running an HOA
as well as working with other residents and resolving neighbor disputes.