When you move into a planned community, you may be required to join a homeowners association. Also known as an HOA, these organizations often collect dues and set rules about things you can or cannot do with or on your property. So what do you need to know if you're about to buy a property run by an HOA?
How HOAs work:
An HOA can exist in a community of single-family homes, condominiums, an apartment building, or any type of neighborhood, really. And if you want to buy a house or apartment in a community with an HOA, you'll have to become a member. The HOA is usually run by a board of directors, collects dues, and makes rules that homeowners must follow.
What's a CC&R?
CC&R stands for "covenants, conditions, and restrictions." This is the document that outlines what you can and cannot do as a member of your particular HOA. The CC&R is developed by the Board of Directors and can be changed as needed.
Typical requirements of a CC&R?
CC&Rs will most certainly vary, but it's common to have rules related to landscaping, pets, noise, parking, and decorations, as well as things like whether you can rent out your property and how high you can build a fence. Less common rules might dictate whether you can hang your laundry out to dry and the color palette you must choose from if you decide to paint your house. If you are considering purchasing a home in a neighborhood with an HOA, you should review these rules carefully and make sure you are prepared to follow them.
CC&R violations:
If you do not follow the rules and regulations of your HOA, you may get a notice, receive a fine, or even have legal action taken against you.
How much are HOA dues?
The cost of your HOA membership dues will depend on your property and community, but they generally range from a few hundred dollars up to $1,000 per month. These dues will sometimes partially apply to things like garbage or snow removal and other services, and can also be used to maintain common areas and amenities (like a gym, park, or swimming pool).
Is an HOA the same thing as a Property Owners Association?
Although they are similar, HOAs and Property Owners Associations (POAs) are different types of entities. According to the website Investopedia, the main difference is that a POA may include members who are not homeowners, who also have an interest in maintaining the community and property values, while an HOA includes homeowner members only.
What are the pros and cons of an HOA?
One of the greatest benefits of being a member of an HOA is that they tend to keep property values high because all homes in the neighborhood are maintained to a strict standard. The downside is that the rules can seem restrictive if you're not clear on what they are beforehand. The good news is: an HOA board of directors is made up of homeowners just like you, so if you are not happy with certain regulations or the way the HOA is run, you can get involved and advocate for changes.
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