Around 25% of the population in the U.S. live in homes with homeowners associations (HOAs).
If you’ve never lived in a home with a homeowners association, you might not know what it even is, but you’ll need to learn if you plan on buying a house that is part of one.
Before you buy a house that is part of an HOA, you might want to learn what it is, and here are seven facts to know about these organizations.
- 1. Homeowners Associations Are Management Organizations
- 2. HOAs Have Directors
- 3. A Homeowners Association Creates Rules
- 4. They Manage the Operations of a Community
- 5. The Residents of the Community Pay Monthly Dues
- 6. The HOA Manages the Finances
- 7. Residents Can Take Part in the HOA
- Research the HOA Before Buying a House
1. Homeowners Associations Are Management Organizations
So, what is the HOA of a community? The answer is that an HOA property management firm is a business that provides management services to communities.
Therefore, a group of properties hire the HOA, and this includes both residential and commercial properties. These companies hire a management firm to handle many responsibilities for the community.
In exchange for the management duties, the community pays the HOA for handling these responsibilities.
2. HOAs Have Directors
When a community hires an HOA property management firm, they choose one based on the company’s experience, reputation, and services.
After hiring the company, the members of the community can take part in the HOA by serving as directors.
It’s wise for the community members to hold the director positions, as these positions provide leadership for the HOA. They make decisions for the community, and they also create and enforce rules.
The HOA management team meets on a regular basis for meetings. During these meetings, they discuss many things related to the community of homes.
For example, they discuss the budget. They also discuss the contractors they hire for work around the neighborhood. During these meetings, they also vote on any outstanding issues that need solutions or decisions.
3. A Homeowners Association Creates Rules
One of the important roles of a homeowners association is to create rules for the community. Every community that has an HOA generally has a list of covenants, conditions, and restrictions (CC&Rs).
The CC&Rs dictate what the residents in the neighborhood can and cannot do.
For example, most communities have rules relating to fences. The rules state whether they allow them or not. If they do, it states the types they can have.
Many HOA management firms also create rules relating to parking in the neighborhood. They might also have rules about the types of homes you can build, the materials required for the homes, and the color schemes.
The board of directors can make changes to the CC&Rs of the community, but they must vote on them. They cannot change anything without getting enough votes from the members.
If a resident breaks a rule, the HOA must enforce it. For example, if a resident builds a structure that the community prohibits, the HOA must ask the resident to remove it.
If your community needs a management firm, you can learn more by contacting VerraTerra.
4. They Manage the Operations of a Community
Another vital thing to realize about HOAs is that they manage the operations of the community. When you live in a neighborhood like this, the HOA provides specific services to you and for you.
For example, the HOA might provide all the lawn care services for the entire community. These services might include mowing, trimming weeds, and blowing the grass off the sidewalks.
They might also include garbage pickup services. Additionally, they might remove snow from the sidewalks and driveways when applicable.
The board of directors chooses the contractors they hire to do these jobs. They might ask for quotes from various landscaping businesses before choosing which one to hire for the yard work.
They might ask several garbage companies for quotes for garbage pickup services before hiring a company. They do this for each service needed.
5. The Residents of the Community Pay Monthly Dues
One vital thing to know is that the residents in the community pay monthly dues to the HOA for the services they provide. The dues range in price, but the lowest you might find is $200 per month.
Some communities charge much higher rates, which might be $500 to $1,000 per month. You’ll pay more if you buy a house in a luxury community than in an average community.
As a resident, you must pay the fees. If you don’t the HOA can sue you for the money. You can even get evicted from your home for failing to pay your HOA fees.
6. The HOA Manages the Finances
An HOA also has the responsibility of managing the finances for the community of homes. They receive all the monthly HOA dues from the residents, and they pay all the bills for the HOA.
The HOA should keep clear records of their finances. They should create monthly, quarterly, and yearly financial statements for the residents to see.
They should also save money each month to use for costly expenditures that the homes might need in the future. For example, the HOA might be responsible for replacing the roofs on all the homes when needed.
As a result, they must save money each month to have enough to pay for this expense when it’s needed.
7. Residents Can Take Part in the HOA
Finally, when you move to a community with an HOA, you can take part in the HOA. The best way to do this is by attending the meetings. The meetings might take place monthly or quarterly, and all residents can attend.
When you attend the meetings, you’ll learn things about the HOA and its financial state. You’ll also learn about the decisions the HOA makes about your community.
Without attending, you’ll have no say in anything the HOA does. By attending, you can voice your opinions and concerns. You can also ask questions if you have any.
Research the HOA Before Buying a House
If you’re considering buying a house, you might want to ask about the homeowners associations of any homes you view.
You’ll need to research the HOA to ensure that they are responsible and effective with their responsibilities.
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