What is an HOA?

A Homeowners’ Association, or HOA, is common in many residential communities that include single-family homes, condominiums, townhouses, or co-ops. The purpose of an HOA is to help maintain an aesthetically-pleasing, clean, and safe neighborhood. Neighborhoods with strong HOAs through the enforcement of the rules and regulations often hold steady or strong property values and are desirable among potential home buyers.

The HOA board is composed of neighborhood residents, elected by fellow residents, who serve in a volunteer capacity, and sometimes representatives from the development’s planners and owners. The role of the HOA board is to address resident concerns, review requests for property changes and improvements, and implement policies that promote an overall enjoyable place to live.

An HOA may have guidelines regarding the color and size of homes, approved landscaping and fencing, and whether or not play structures or trampolines are allowed in yards. Some have strict guidelines prohibiting the parking of boats and recreational vehicles in driveways, leaving trash cans visible from the street, and even the color of curtains visible through windows from the street. It is important to understand the HOA guidelines and penalties for violations that can vary from fines to a home lien. In some cases, an HOA may be able to foreclose on the property if dues are not paid or for severe violations.

Most HOAs assess dues to residents that are paid monthly, quarterly, or yearly. These dues pay for the upkeep of landscaping in common areas, insurance, security, and amenities like walking trails, pools, workout facilities, and neighborhood activities. Some HOAs require residents to pay for large community expenses like a clubhouse or utilities through one-time assessments in addition to normal dues, and some may have transfer fees for new property owners.

HOA dues can vary widely from a few dollars per month to hundreds of dollars per month. Some HOAs charge lower fees, but then assess frequent additional costs to cover neighborhood expenses as they arise while others charge higher fees and establish a reserve fund that prevents homeowners from having more frequent, unplanned payments. Different sections of the same neighborhood may have varying amenities like maintenance-provided options, a gated entrance, or an exclusive clubhouse, and these additional options typically come with additional fees.

When selling a property, it is the responsibility of the home seller to provide information on the HOA dues and amenities that are covered. While dues typically increase no more often than annually, it is advisable to inquire about planned increases or anticipated one-time assessments. HOA dues are often planned three to five years out based on estimated future expenses, planned neighborhood growth, and anticipated capital improvements.

HOAs are common across the country and across community types. It is important to understand not only the current HOA fees but also the anticipated future costs to avoid unplanned expenses. While they add an additional expense to property owners, they have a long-standing record of maintaining higher property values.



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