What Is an HOA? Facts to Know

Homeowner’s Associations (HOAs) are organizations in residential communities that make rules as well as enforce rules for the residents. Generally speaking, when people think of HOAs, they think of neighborhoods containing single-family homes. However, it is very common for multi-unit buildings to have HOAs as well. Regardless, the residents are the ones who run HOAs. In fact, a lot of residential communities require interested individuals to become members before buying a home in the relevant area.

What Can You Expect From Being in a Homeowner’s Association?

Here are some of the things that interested individuals can expect from living in a community managed by an HOA:

Fees Can See Enormous Variation

Perhaps unsurprisingly, HOA members will need to pay fees, which can see enormous variation based on a number of factors. For example, HOAs in more expensive real estate markets have higher fees than HOAs in less expensive real estate markets. Likewise, the number of amenities, as well as the size of the amenities, influence HOA fees because of their effect on property upkeep. It is even possible for HOA fees to differ within the same development because of factors such as location, orientation and square footage.

The Package Can See Enormous Variation

HOA membership comes with both obligations and entitlements. Naturally, these can also see enormous variation from HOA to HOA as well. For example, some HOAs will cover the utilities. In contrast, other HOAs will let their members handle such things on their own. It is important to note that interested individuals will be paying money for entitlements even if they don’t use them, which is something that should definitely factor into their home-buying decisions.

There Might Be Special Assessments

Sometimes, HOAs charge higher fees for the purpose of maintaining a reserve fund that is used to cover unexpected costs. Other times, HOAs charge lower fees because they don’t bother with reserve funds. Instead, they charge special assessments when they can’t cover repairs and maintenance using HOA fees. Naturally, interested individuals should scrutinize special assessments with the assistance of financial professionals to make sure that what they pay is reasonable for what they will be getting.

Look Into the System For Conflict Resolution

Conflicts are inevitable within residential communities. As a result, HOAs will have systems for conflict resolution that interested individuals should look up. Some HOAs have a lot of power in this regard, with examples of sanctions including fines, lawsuits, and even placing a lien upon a home.

Understand the Election Process

HOAs are run by an elected board. There are a couple of places to check for the election rules, with one being state laws on the topic and the other being the HOA’s governing documents. The latter should contain critical information such as when elections are held, the number of board members who will be elected, the limits on the terms of board members, the number of board members who must be present to form a quorum, and so on and so forth. Generally speaking, interested individuals can either nominate themselves or be nominated by other HOA members. After which, every member can vote using either ballots, secret ballots, or even by proxy in places where that is permissible. Not every HOA will vote on every relevant position, which may or may not make sense depending on exactly what duties and responsibilities are associated with them. In some states like California, the election process for an HOA has to be directed by a 3rd party election inspector. These HOA election inspectors help communities choose board members without playing favorites or electing individuals based on other influential factors.

Further Considerations

By this point, it should be clear that different HOAs can be run in a very different manner from one another. Interested individuals should always look into every aspect of an HOA to get a clear idea of what they will expect as an HOA member. This is true even if they have past familiarity with other HOAs because they can’t count on what they know holding true for other associations.