What Is HOA? How Do These Communities Work?

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What is HOA? The term HOA may seem unfamiliar to many people — even those that live in an HOA community. But, understanding HOAs is vital. All community members need to know what they are for and why they exist.

Definition of Terms: What Is HOA? 

What is HOA, and what does HOA mean? The acronym “HOA” stands for “homeowners association.” What is a homeowners association, you ask? It is a private, non-profit organization that handles a community of homeowners. The HOA is comprised of residents and is led by an HOA board elected by the community.

Why Do HOAs Exist?

Homeowners associations exist to benefit the community. They do so mainly by increasing property values. According to one Northern Virginia study, the properties within an HOA are worth 5% more than those outside of one.

Why is this? Property values are higher in HOAs because homeowners associations take care of the community better. They do this by maintaining shared facilities and communal areas, keeping the neighborhood clean, and improving visual appeal. Houses in a well-maintained community are often more attractive to buyers, thus increasing property values.

How Do HOA Communities Form?

The developer usually forms homeowners associations as they create the community. Each homeowners association will have its own governing documents that make it a legal entity. These documents are legally binding. But, they must be in line with local, state, and federal laws like the Fair Housing Act.

An HOA’s governing documents typically include the CC&Rs, rules and regulations, bylaws, and ARCs. These documents dictate how the community functions and looks to an extent. It also outlines board responsibilities and homeowner rights.

Once formed, the HOA is handed down to homeowners, who select a qualified board of directors. The HOA board is in charge of keeping the community clean, well-maintained, and organized. They manage the community’s finances, collect dues, handle delinquent accounts, and maintain shared spaces.

Once a person buys a unit within the HOA, they automatically become a community member. They must abide by the community’s governing documents and rules. Moreover, they must pay HOA fees and assessments. 

What Are Rules and Regulations?

An HOA’s rules and regulations are simply a list of rules the community must follow. The rules vary between homeowners associations as different communities will allow or disallow different things. Hence, potential homeowners need to review them before joining an HOA.

The HOA rules and regulations often contain guidelines that deal with architectural changes. For example, it may dictate how high fences can go or if a homeowner can install pools and porches. They can even prohibit certain holiday or lawn decorations.

Apart from this, some rules and regulations deal with other living standards. Some examples include policies on pets, home maintenance, home occupancy, parking guidelines, and short-term rental restrictions. 

What Are HOA Fees?

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HOA fees are monthly payments each homeowner must pay as a community member. What do hoa fees cover? Typically, the HOA uses these fees to maintain common areas. The association uses them for cleaning, regular maintenance checks, and repairs. Moreover, HOA fees also pay for common utilities like water, sewage, garbage disposal, and electricity. 

Apart from these, HOA fees can also cover the community’s management fees if they hire an HOA manager. They also cover other expenses such as HOA insurance, attorney fees, security fees, etc.

How Much Are HOA Fees?

Homeowners association fees may deter people from buying homes in an HOA community. After all, many homeowners already have to pay for a monthly mortgage. Paying another monthly fee on top of that can be burdensome.

But, it’s important to understand that homeowners associations typically vary in how much they charge. Most HOAs charge a reasonable monthly fee to maintain the community. This will usually depend on the location of the neighborhood.

Typically, homeowners association fees cost about $200 to $300. However, this number can rise if the HOA has more amenities and luxuries that need more maintenance. For example, the fees may be much higher in a community with a swimming pool over one without.

Furthermore, HOA fees are often higher in communities with large-scale projects. For instance, a community replenishing its funds because of a recent typhoon may charge higher. HOAs renewing the pipeline or installing new facilities may also charge more.

What Happens When You Cannot Pay the Fees?

Homeowners association fees can be taxing for many people. Hence, some homeowners may not be able to pay their monthly dues. What will happen to these residents? Will they be kicked out or evicted from their homes?

The initial consequence for failing to pay these fees is usually more fees. Homeowners who cannot pay may incur penalties and accumulate more debt to the HOA. Apart from this, some HOAs may also deny using common areas until they make the payment. Thus, a homeowner who cannot pay might be unable to access the community’s clubhouse, gym, or pool.

The homeowners association may also declare the resident a “delinquent” when they cannot pay their dues repeatedly. Technically, a homeowners association cannot evict residents from their homes or kick them out of the community. However, the HOA may claim the delinquent person’s home in severe cases. They may file for foreclosure to cover the unpaid fees. 

Understanding the HOA

What is HOA? Through this article, we hope you understand what a homeowners association is and how it works. Everyone who buys a home in an HOA community is automatically a member. They will benefit from a well-maintained neighborhood and higher property values.

However, running an HOA can be tough. The HOA board might need the right tools or expertise to manage the homeowners association well. As such, it’s best to seek the help of a professional HOA management company like Landmark Community Management. We serve homeowners associations across Texas and can bring value to your community.