A Home Owners Association (HOA) is an elected body made up of residents from a condo, townhouse or a single home development who oversee the management of the community and common areas.
An HOA manages the overall health of a community and is funded by fees that are paid for by all residents to continue and maintain the overall upkeep of the community. The HOA manages the budget, repairs, maintenance and enforces common rules and regulations for all homeowners.
61% of new single home communities now have an HOA system
up from 46% in 2009 with the southern and western US having the highest take up.
How Does An HOA Work?
An HOA is made up of elected members who are owners and residents of the particular community. An HOA community is typically a condominium building or a community made up of townhouses or single homes. It typically has common areas such as a lobby in the case of a condo and perhaps a fitness center, swimming pool, golf course as well as public pathways, roads, seating areas and other amenities for residents to use.
The HOA has bylaws that govern the election of its members and how the board is to operate. The HOA has the responsibility to manage the overall budget of the community, oversee staff for the common areas, enforce rules and regulations, deal with contractors and to ensure that repairs and replacements are made in all HOA facilities.
In Canada, HOAs are referred to as a condominium board and effectively serve the same purpose. The UK generally doesn’t have HOAs or an equivalent in the same sense as in the US.
Pros And Cons of An HOA
Before purchasing or even renting a unit in a community with an HOA there are certain things you should be aware of as it can offer both benefits and considerations to think about.
| HOA Pros | HOA Cons |
| A well-run HOA can increase the value of your home and the community. | A poorly-run HOA can cause the community to suffer and infighting can pit neighbor against neighbor. |
| The community is managed by residents so there is a sense of ownership and personal accountability. | Some HOAs can be very restrictive in terms of outside garden design, what color you paint your home exterior, installing Christmas lights, etc. |
| HOAs have become increasingly popular in recent years particularly in single home communities. | If an HOA needs urgent repairs, a special assessment can be issued where all owners have to pay an amount on top of normal HOA fees to fix it. This could be thousands of dollars or more. |
| You can run for a seat on the HOA if you’d like to be an active part of the management of your community. | HOAs have legal standing and have options to foreclose on your property if you refuse to follow rules or don’t pay HOA fees. |
| An HOA keeps owners in check so that units are kept in shape and up to a similar standard as others. | It’s mandatory to pay HOA fees and abide by collective rules and regulations. It’s not voluntary. |
| While the HOA represents the community, they don’t have unlimited powers and you can challenge them if necessary. | Costly lawsuits by or against the HOA are covered by the fees that homeowners pay every month. |
| HOAs actively encourage ownership input and participation in their community. | High HOA fees may help to sink your mortgage application if you’re a borderline applicant. |
| HOAs typically offer you facilities conveniently at your doorstep (ie. gym, pool, golf course). | If your HOA has facilities that you will never use (ie. gym, pool, golf course) you’re paying for them anyways through your fees. |
What Rights Does The HOA Have On My Home?
Many aspects of the HOA involve managing the common elements of the community which can include things like a swimming pool, fitness center, lobby, party room, barbeque area or golf course among other things. Their role is to ensure these elements are properly maintained, staffed and operated.
The HOA also ensures that the community has a common feel in terms of each home or unit. The HOA can enforce various rules related to the exterior of your home including paint color and also what you can display outside your house. Some stricter HOAs get involved in limiting what types of flowers and vegetation can be grown in your garden and you might even require permission to put garden gnomes, a flag or other items outside your house. They may even have a say in roof tile color in the case of replacement.
HOAs often take care of lawn mowing, gardening and snowplowing for all residents to further ensure a sense of community and standardization.
If you like to do your own thing, an HOA-run community may cramp your style given the number of areas of your home and community they have a say over.
HOA Horror Stories
One of the most common negatives that people hear regarding homeowner associations relates to the idea that many HOAs have at least one member who is a hardcore stickler for rules. This is someone who has nothing better to do than file complaints about neighbors who aren’t in compliance with even the smallest regulation. You will also read stories about HOAs who will bend or change rules when it negatively affects one of the association members. You may also find residents who aren’t part of the HOA with the same attitude.
On the other hand, there are many documented cases of HOAs collectively objecting to certain things that homeowners have done that end up either costing the homeowner or the HOA when one side takes the other to court to fight the ruling. In many cases, it can be due to HOAs misinterpreting their authority or simply not understanding the law.
Common ways that homeowners run afoul of HOAs include parking violations, fence design and height, painting the exterior of the home, the placement of outdoor trampolines and children’s swing sets, putting signs up on the lawn, and things of that nature. Residents don’t have the right to arbitrarily make changes to common areas either. Anything that hasn’t been explicitly approved by the HOA may be subject to a problem if it is visible to people walking past your house and someone complains.
For many homeowners in an HOA, the fear of a poorly run, dysfunctional, split HOA is probably the biggest potential negative. Having said that, HOAs are made up of elected representatives who can be replaced during the next round of elections.
How To Deal With An Unreasonable HOA
There are several steps you should take to handle a homeowners association who is stepping outside its boundaries or is otherwise causing you trouble:
- Be pleasant and don’t turn the HOA against you. They are neighbors and volunteers. They aren’t your employees and there are more of them than there are of you. They aren’t all powerful but the HOA has power.
- Learn the HOA rules so you can speak freely and comfortably on them.
- Understand what the HOA can and cannot enforce.
- Be aware of the appeal process so that you can use it if fighting a specific complaint you have received.
- Understand the fines and penalties for running afoul of regulations.
- Continue paying your fees. If you stop paying them as a protest, that creates another problem since you are obligated to pay them.
If you have a dispute with the HOA, put your response to their complaint in writing rather than simply verbally responding as chances are you will receive a written complaint from them. Send a letter and follow up by email if possible to create a provable paper trail.
One obvious way to deal with an HOA is to join them. Run for a spot on the association and try to make the change(s) that you want. This happens more than you might think. HOAs are simply boards made up of people and each have their own egos, desires and wants. Getting on the board is one of the more obvious ways to keep them in check and get what you want.
Who Is Responsible For Paying HOA Fees?
The current legal owner of the property is responsible for paying the HOA fees. These fees are typically paid monthly or quarterly. Upon sale of the property to another person, the new owner’s lawyer must check in advance to ensure that there are no outstanding liens or fees to be paid as the new owner could inherit the liability once the sale has closed.
A common issue that often arises after an HOA or a bank has foreclosed on a property in a community is that outstanding HOA fees become the problem and responsibility of the new owner. So if you buy a foreclosed property or a short sale property in an HOA community, be 100% sure that there are no liens or outstanding debts that you will be responsible for. Get your lawyer to check the HOA estoppel certificate and ensure all due diligence is done before purchase. This is especially important in cash only deals which is where corners often get cut since no bank is involved to do the due diligence that you also benefit from.
Can My HOA Foreclose On My House?
Yes, if you fall behind on HOA fees or refuse to pay them. The HOA fees are mandatory and the HOA could put a lien on your home until you pay the fees and if you don’t, they may eventually try to foreclose on your home to collect the fees and settle the issue.
In many states, HOAs are given priority status when a lien is involved even if the property has a mortgage on it. In that regard, the HOA is powerful and skipping out on paying HOA fees or a special assessment may end in foreclosure.
Can A HOA Force You To Sell Your Home?
An HOA cannot force a homeowner to sell their property if they are behind paying HOA fees or are simply refusing to pay them. The HOA can place a lien on the property however which could eventually lead to the property being foreclosed.
There are circumstances when an HOA may also stop or delay the sale of your property if you are behind on paying your fees. Remember, the new owner of a property is obligated to pay outstanding HOA fees even they didn’t incur them so an HOA will want to clear this up before a home is sold to avoid an immediate dispute with the new owner.
Having said that, the homeowner may also sue the HOA for preventing the sale if the HOA overstepped their authority so a balance has to be struck in this regard.
Summary
Owning or even simply living in a property that is part of a homeowners association (HOA) comes with both benefits and responsibilities. With the rise in the number of new communities in the US adopting an HOA system, it becomes more difficult to simply avoid HOA-run neighborhoods if you have no desire to be part of one. In condos as well as townhome and single home communities, homeowner-managed neighborhoods are becoming the norm rather than the exception.
HOA communities can be a good choice for someone who wants to be an active part of the community and is someone who can follow certain collective rules and regulations that the association enforces.
If you are considering purchasing a home with an HOA, do your research before buying to learn about the recent history of the association. Speak with existing residents about their experience and if possible, meet members of the HOA personally to get a sense as to whether or not you want to live among them.