A homeowners’ association (HOA), or sometimes referred to as a property owners association (POA), is an entity that looks over residential communities, including houses, townhomes, and/or condos. They are responsible for setting rules, holding meetings, delegating financial responsibility, and maintaining and repairing exterior problems around the community. The HOA is made up of a board voted by the residents, and they make important decisions regarding the overall property on the residents’ behalf.
If you are deciding whether you should buy a townhome or condominium with an HOA, it’s vital to recognize what the fees are, what responsibilities and obligations are involved, and what happens if you refuse to pay the HOA fees.
What is an HOA and what’s its purpose
As stated, an HOA is an entity that manages and oversees the housing community. It does not exist for those buying a single-family home but is more common with condos, townhomes, and retirement community living arrangements. Since there’s a monthly fee associated with living in any community where a homeowners association is established (see more below on the fees), and the HOA must ensure they’re living up to their end of the agreement. Here are some of the things to know about the HOA’s responsibilities and why a reasonable HOA can be vital for residents, but a bad HOA can be challenging to endure.
Exterior repairs and maintenance
Homeowners associations must provide repairs and exterior maintenance to the following areas:
- Exterior of buildings
- Community swimming pools
- Parking lots
- Parking covers
HOAs are not responsible for providing interior maintenance. When it comes to maintenance, HOAs can also respond to emergency issues and utilize the budget necessary for home repairs or maintenance. The HOA members must act in good faith to organize maintenance, collect bids, and arrange inspections and repairs.
With every homeowners’ association comes a document about the rules, referred to as a declaration of covenants, conditions, and restrictions. This is a document that explains how the HOA is structured and its responsibilities, but it also sets the rules regarding the acceptable modifications and improvements that residents can make to their individual residence, townhome, or condos. For regulations, these are some of the duties of the HOA:
- Set forth the covenants, conditions, bylaws, and other rules for the residents and their behavior.
- Investigate resident complaints and make decisions on how to deal with them.
- Set forth any penalties that residents face if they break any of the rules or breach bylaws in the HOA contract.
- Delegate any committees they appoint.
The covenants, conditions, and restrictions may also contain specific bylaws each resident must follow. Specifics can include whether residents can paint their home a particular color, what curtains or drapes show from inside the house, and more. The overall goal for the HOA is to ensure the entire community has uniformity.
Meetings and finances
The homeowners association is responsible for its financial health and that of the community. Through many meetings, the HOA designates finances to determine the HOA’s total income and expenses. This is necessary to ensure homeowners’that homeowner fees are used appropriately to improve the community, provide maintenance, or repair issues.
In some cases, if the HOA account balance is not large enough and repairs exceed the amount of budget the homeowners association needs, it may have to make one special assessment to charge members of the association a one-time fee.
Pros and cons of an HOA
There are several pros and cons of having a homeowners association. HOAs help to preserve property value and ensure uniformity. It’s also good because the association provides exterior repairs and maintenance that you don’t have to worry about on your own. However, a homeowners association that has strict covenants can be challenging to endure. They may dictate animals you may own, whether you can have specific colors showing from your home, and more. And if you don’t comply, they may penalize you with fines or more.
How much are the HOA fees?
HOA fees widely vary depending on where you live. Usually, it’s within a few hundred dollars each month. A few different factors come into play when determining how much the homeowners association fees are. Here are a few of the factors that change the monthly cost of HOA fees for residents:
- The number of individual units in the HOA
- The number of services and amenities provided by the HOA
- The HOA’s ability to manage finances
- The number of repairs or maintenance provided by the HOA
Whenever a potential home buyer is looking to purchase a condominium (condo), or townhome in a community with an HOA present, it’s important to investigate how much the monthly HOA fees are. If there’s a high HOA fee, try to understand how the fees are used to provide back into the community. Make sure that the higher the fee, the better it is for residents.
Can I refuse to pay HOA fees?
Homeowners sign a contract with the HOA, meaning they agree to pay the fees monthly. However, some issues can impact what happens if the homeowner doesn’t pay their monthly fees. For instance, here are some situations to understand regarding HOA fees and what happens when someone doesn’t pay:
- A homeowner may not pay their HOA fees if the homeowners association doesn’t live up to their end of the contract by providing repairs, maintenance, etc.
- A homeowner who fails to pay an HOA fee for no reason may face the following:
- A potential late fee
- A financial penalty
- A lawsuit
- A lien on their property
- A foreclosure
- A homeowner who doesn’t pay their HOA may cause common areas to suffer, or a one-time fee may be issued to others for the lack of funds.
Potential home buyers need to know what they’re getting into regarding homeowners associations. While there are many benefits to a homeowners association, it’s vital to read the contract. Homeowner association fees can make or break a decision, but the rules can also impact whether or not a home buyer should enter a contract with an HOA.