Homeowner association facts for kids

A Homeowner Association (often called an HOA) is a private group that helps manage a neighborhood or housing community. Think of it like a mini-government for your community! HOAs are common in places like the United States, Canada, and the Philippines.

When you buy a home in an HOA community, you usually become a member automatically. This means you agree to follow the HOA's rules and pay regular fees. These fees help pay for things like maintaining common areas, parks, or even private roads.

HOAs are often started by real estate developers. They help sell homes and manage the community. After a certain number of homes are sold, the homeowners usually take over control of the HOA.

These groups are important because they help keep neighborhoods looking nice and running smoothly. They can set rules about things like how your house looks from the outside or what colors you can paint it.

History of HOAs

For a long time, communities have worked together to take care of shared spaces like wells or roads. Modern HOAs started to become more common in the early 1900s.

At first, some HOAs had rules that were very unfair. For example, some rules tried to stop certain groups of people from buying homes in a neighborhood. However, laws like the Fair Housing Act of 1968 made such discrimination illegal. Today, these kinds of rules are not allowed and cannot be enforced.

In the 1960s, the government started to encourage HOAs more. This was partly because developers wanted to build more homes in new ways. HOAs helped manage shared spaces like parks and green areas in these new developments.

Later, in 1977, the U.S. Clean Water Act made new rules about managing rainwater. This meant many new neighborhoods needed special areas to hold storm water. HOAs often took on the job of maintaining these "common areas." This also led to HOAs having more power to set rules about how homes and yards looked.

How HOAs Work

Most HOAs are set up as private groups, often non-profit. When you buy a home in an HOA community, you automatically become a member. This means you agree to pay fees and follow the rules. In return, you can use the community's shared facilities, like a pool or clubhouse.

HOA Rules and Documents

HOAs have important documents that explain how they work. These usually include:

• Covenants, Conditions, and Restrictions (CC&Rs): These are like the main rulebook for the neighborhood. They cover things like what types of buildings are allowed, how big your house can be, or rules about pets.
• Bylaws: These explain how the HOA itself is run, like how meetings are held and how leaders are chosen.

These rules are legally binding for everyone who owns property in the community. However, if a rule goes against a state or federal law, it cannot be enforced.

Who Runs the HOA?

An HOA is usually managed by a group of people called a board of directors. At first, the developer might choose the board members. But as more homes are sold, homeowners get to elect the board members themselves. Eventually, the board is made up entirely of homeowners.

The board makes decisions about the HOA's money, takes care of shared property, and makes sure everyone follows the rules. Board members have a duty to act in the best interest of all homeowners.

Managing the Community

Many HOAs, especially larger ones, hire professional management companies. These companies help with daily tasks like:

• Handling money, collecting fees, and managing the budget.
• Organizing board meetings and elections.
• Arranging for maintenance and repairs of common areas.

What HOAs Can Do

HOAs have certain powers to help manage the community:

• Provide Amenities: They can offer shared facilities like swimming pools, tennis courts, clubhouses, or parks.
• Set Rules: They create rules about how properties look and how people use common areas. For example, they might have rules about lawn care or house colors.
• Collect Fees: HOAs collect regular payments, called "assessments," from homeowners. These fees cover the costs of maintaining common areas and providing services. Sometimes, if there's an unexpected big expense (like a major road repair), they might collect a "special assessment."
• Enforce Rules: If someone doesn't follow the rules, the HOA can take action. This might include giving fines or, in some cases, placing a lien on a property for unpaid fees.

To help manage specific areas, the HOA board might create committees. For example, an "architectural control committee" often reviews plans for changes to homes to make sure they fit the community's look.

Benefits and Challenges

HOAs can offer both good things and some challenges for homeowners.

For Homeowners

Benefits:

• Amenities: You might get access to cool things like pools, parks, or clubhouses that you wouldn't have otherwise.
• Maintenance: The HOA often takes care of common areas, so you don't have to worry about them.
• Property Values: By keeping the neighborhood looking nice and well-maintained, HOAs can help keep property values high.
• Community Standards: Rules help ensure a consistent look and feel for the neighborhood.

Challenges:

• Fees: You have to pay regular fees, and sometimes special assessments, which can add up.
• Rules: The rules can limit what you can do with your property, like what color you can paint your house or what kind of fence you can have.
• Board Decisions: Sometimes, the board's decisions might not match what you prefer.

For Local Governments

Many cities like HOAs because they can help reduce costs for local government. Since HOAs often pay for things like private roads, parks, and other services within the development, the city might not have to spend as much money on those areas. However, some studies suggest that HOA members might be less likely to vote for taxes that fund public services for the wider community.

For Developers

Real estate developers often create HOAs because it helps them build and sell homes. By offering shared amenities and managing common areas, developers can make their projects more attractive to buyers.

Criticisms of HOAs

Some people have concerns about HOAs:

Voting and Representation

In HOAs, voting is usually based on property ownership. This means that if someone owns more properties, they might have more votes. Also, renters usually cannot vote directly in HOA matters. Some HOAs try to balance this by limiting how many votes one owner can have, no matter how many properties they own.

Restrictions

HOAs are sometimes criticized for having too many strict rules. These rules can cover many things, like:

• How tall your grass can be.
• How many cars you can park on your property.
• What kinds of animals you can have.
• What signs you can display.
• What plants you can grow in your yard.

People have sometimes challenged these rules, especially if they feel the rules limit their freedom of speech. However, courts have often said that HOAs are private groups, so they don't have to follow the same rules as the government when it comes to things like free speech.

Financial Risks

In some places, if a homeowner doesn't pay their HOA fees or fines, the HOA might be able to put a lien on their property or even take steps to sell their home. This can be a big financial risk for homeowners. However, many states have laws to protect homeowners and require a legal process before such actions can be taken.

HOA boards can also collect special assessments for unexpected costs. While most states have rules about how much can be charged without a homeowner vote, large unexpected costs can still be a burden.

Because HOAs handle a lot of money, it's important for them to be managed carefully. Many HOAs have regular financial checks, called audits, done by independent accountants. This helps make sure the money is being handled correctly and honestly.

Limits to HOA Powers

While HOAs have many powers, there are also limits to what they can do.

• Satellite Dishes and Antennas: HOAs generally cannot stop you from installing a small satellite dish (one meter or less) or an over-the-air (OTA) rooftop antenna. They can suggest where to place it so it's less visible, but they can't prevent you from getting a signal.
• Landscaping: Some states have laws that protect homeowners who want to use water-saving landscaping, like xeriscaping. Even if an HOA has rules about grass, these state laws can prevent the HOA from stopping you from using these types of plants.

Alternatives to HOAs

One alternative to an HOA is a "multiple-tenant income property" (MTIP). In an MTIP, you pay rent to a landowner, and the landowner decides how to manage the property and its shared areas. The idea is that the landowner has a strong reason to keep residents happy and the property valuable in the long run.

See also

In Spanish: Comunidad de propietarios para niños

• Gated community
• Housing society