What is an HOA?
A homeowners association (HOA) is an organization that enforces rules in planned communities or condominiums. A planned community that has an HOA may have swanky perks such as manicured lawns, resort style pools, and community gatherings for big holidays.
How does an HOA work?
The HOA is made up of a board of community members who are in charge of keeping the neighborhood uniform and the shared amenities in pristine condition. The community members pay dues to the HOA to help keep the neighborhood in the desired condition.
Homeowners within HOA boundaries also agree to keep any rules set forth by the HOA, and pay a fine if they break them. These rules can be very restrictive about what homeowners can or can’t do with their properties.
The History of HOAs
Planned communities got their start in the first half of the 20th century but had little traction with homeowners. At the end of World War II, however, large cities became overpopulated and homeowners needed other options outside of the city.
The development of planned communities focused on the idea of giving numerous homeowners a shared common area. After the 1960s, planned communities became extremely popular and led to the creation of private developments built by private developers. The developments wanted some way to keep the neighborhoods orderly, and this led to private organizations known as the homeowners association.
How are HOAs governed?
HOAs have a board made up of an elected board of directors who oversee the HOAs governing documents and other responsibilities. This board is responsible for governing planned communities with single-family homes or multiple units, such as condominiums. HOAs enforce the rules regarding properties within their jurisdiction.
Governing Documents of an HOA
The governing documents of an HOA outline the rules of the community; this is called the declaration of covenants, conditions, and restrictions. This details the certain conditions that owners must follow while living in the community. The HOA governs all amendments to the governing documents. HOA rules can include proper pool etiquette, lawn appearance, the color of your home, fence height, and more.
Typical HOA Fees
HOA dues are collected monthly or annually. These dues pay for the upkeep of common areas like parks, tennis courts, the clubhouse, pool, and elevators. They also compensate the HOA for enforcing the neighborhood rules. The average homeowner will pay an HOA fee of $200-$300 a month or a lump sum one time annually.
HOAs also have reserve funds for large repairs or in the case of emergency they can rebuild in the unlikely event of a catastrophic event. The board of governors monitors these funds and is responsible for the management of those funds.
Do you have to pay HOA fees?
Yes, if you live in an area that is governed by an HOA.
HOAs can impose special assessments on homeowners if the association lacks funds for large repairs. This typically happens when the reserve isn’t large enough for unexpected repairs like sidewalks or parking lots.
Aside from imposing fees for breaking the rules, the association can put a lien on the property if the homeowner falls behind in paying their dues. A homeowner opting not to pay isn’t advisable because HOAs can take legal action against you.
Homeowners living under the jurisdiction of an HOA will generally aim to maintain the property according to the HOA guidelines. Along with the community looking uniform, the amenities are typically well maintained and homeowners are encouraged to use them.
When communities maintain a certain level of quality and pristine conditions, home values often stabilize and sometimes resale values increase. The Community Association Institute reported that 90% of homeowners say their association has protected and increased the property values.
The disadvantages of owning a home in a HOA community is the HOA fee includes the cost associated with having a mortgage. This can be a deterrent if you’re looking to keep your monthly expenditures low. HOAs can be too restrictive for some homeowners looking to customize.
If you’re a homeowner wanting to personalize your lawn, fence, or any other customization and HOA community could prove to be too restrictive for you.
The board of directors may not have the time to monitor the community and when this happens, the HOA will look for a management company. The management company is hired to oversee the day to day obligations of the board. Normal responsibilities include paying contractors, communicating with residents, collections, and handling fees. They will enforce and uphold all governing rules of the community.
What is an HOA violation?
Learning the rules of your community is crucial because a violation fine could incur. A violation is anything that homeowners do outside of the HOA’s policy. A violation can carry serious consequences such as:
- Legal ramifications
- Liens against your house
Can an HOA evict a homeowner?
HOAs can evict homeowners for delinquency in fees—but this rule must be included in the governing documents. All violations should be checked against the governing documents. You can get these documents from your real estate agent, the board of the HOA, or found online.
Can an HOA levy fines?
It is also not uncommon for HOAs to levy fines for violations. In situations where homeowners break the rules, they may receive a fine. If they do not pay the fine, they may place a lien on your house.
Your Rights When Living in a HOA Community
HOA management can make homeowners feel like that don’t have rights, but the association is not above the law. HOAs are bound by the rule of law just like any other association. The association can not discriminate, make you take down a clothesline, fine you against the governing documents, make decisions secretly, remove your satellite dish, restrict plants, or restrict the homeowner from suing the association.
Homeowners must protect themselves from homeowner associations. It is imperative to know your governing documents and your rights inside your HOA regulated community. Otherwise, you may be vulnerable to outlandish fines set forth by the association.
Some people wonder, “Can I sue my HOA for harassment?” The answer is yes. Keep in mind, however, that you signed up for these rules and must abide by everything that you agreed to. If you want to sue your HOA, talk to a lawyer who has experience with HOAs.
Are HOA fees deductible?
HOAs are not tax deductible unless the homeowner is renting the home out to another family. If the homeowner is renting the home then they can deduct the HOA fee for the period of time that the home rents out.
Can police enforce HOA rules?
Police have no jurisdiction with enforcing HOA governing laws because the charges are not criminal. If it is a civil matter, small claims court will handle it.
Can you dissolve a homeowners association?
Absolutely. All you need is the vote of the majority of those within the HOA. This is difficult to do, however, because the HOA protects the homes within the community against drops in home value due to the neighbors not keeping their yard up.
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