What is an HOA - The Meaning, Regulations, Pros & Cons

There is nothing more beautiful than a well-kept neighborhood with beautiful houses, gardens, landscaped gardens, and parks. Would any of it be possible if it weren't for a community of people who have the same interests and care about making their neighborhood look like a fairy tale? 

Well, it is possible, if you belong to the HOA organization. So what is an HOA? In this article, we will take you through what an HOA is, how it works, what the HOA benefits are, as well as the disadvantages, and how to become a member. But let’s start with the essentials.

What Does HOA Mean?

HOA is an acronym that stands for Homeowners Association. It is actually an organization of people who own residential facilities in the same community. They function according to specific written rules that apply to all members and must be respected. 

But why do homeowner associations exist? The goal of an HOA is to increase property value, and in order to achieve that, there are exact rules for how all properties should look and what owners are allowed to do with them. 

Also, in order to improve the community and harmony within the neighborhood, the point is for all homeowners in one community to join together in order to protect the collective interests of property owners

Members may be residents of residential facilities such as their own house or building. At the head of the HOA is a board of directors who run the organization, set rules, and collect maintenance fees for common facilities (swimming pools, parks, parking lots, and roads, as well as communal lawn maintenance and landscaping). 

These rules may refer to the following: Your house must be white in color, the garden must be surrounded by a separate fence, clean up the garbage on the street within the common property, etc. Each HOA writes its own rules, but they are generally similar in principle.

All those who buy property in the jurisdiction of the HOA automatically become members of this organization and are obligated to pay the membership fee, i.e. HOA fees that cover common amenities. You will learn more about the regulations of this organization, fees, and pros and cons below.

How Does It Work?

A prerequisite for the formation of an HOA is that there is a community of homeowners who will act in accordance with established rules. The homeowners association is created by a developer who, when formed, hands over all activities to people who buy real estate in that community. Then they become members of the HOA. 

As we have already mentioned, there is a board of directors that will have a leading role in the management of the organization, who are voted for by all the homeowners. In order to be legally regulated, the HOA has procedures laid out in the Declaration of Covenants, Conditions, and Restrictions (CC&R) document. Anyone who buys a house must comply with the rules indicated in that declaration.

What Is the HOA Fee?

HOA fees can cover a wide range of services. HOA fees are also called HOA dues and are basically monthly or weekly payments to the homeowners association. They vary depending on the location and value of your property. Prices can range from $170 to several thousand dollars.

HOA fees must be paid regularly and payments continue as long as you live there and even after you pay off your property. Every expense is a liability, but in order to lead a quality life, you may want to become part of the organization and invest in increasing the value of the common property.

Your fees help cover the costs of the commons. But you should know that a part of the collected money goes to the reserve fund, which is a savings account used to cover expenses such as, for example, the renovation of the parking lot, the replacement of the old roof, and the care of greenery.

What you will surely be interested in is whether HOA fees are included in the mortgage. And the answer is no - fees are paid directly to the association and have nothing to do with payments to your lender.

Although being part of an HOA brings many benefits, there are also certain disadvantages that you must be aware of. So let’s deal with the pros and cons of this organization.

What are the Pros and Cons of the Homeowners Association?

Investing smartly in the community to provide residents with the amenities anyone could wish for is the primary mission of the HOA.

Since an HOA provides a unique look to your properties and offers significant benefits to preserve (or increase) its value, it often pays to be a part of such an association. But just as everything has its advantages, there are certain disadvantages that cannot be bypassed.

The pros of an HOA are:

• High standards of property and environmental protection – They refer to the guidelines and regulations on the cleanliness and condition of the property, the repairs they make, the arrangement of yards, streets, and common areas such as swimming pools, parking lots, tennis courts;

• The beautiful appearance of your property – Appearance includes a beautiful facade, a landscaped yard, green grass, yard machinery;

• Amenities – HOA offers great amenities for all members, gyms, pools, security, trash removal, and snow removal;

The cons of the HOA are:

• Membership fees –  On a monthly basis, you will need to set aside money for the HOA. This fee could be problematic, depending on your overall budget. The fees can also increase based on the size and value of your property;

• Additional fees – When it comes to larger projects that require a lot of money and the HOA is not able to allocate that money, you will be forced to pay out of your own pocket;

• Lack of privacy – One of the disadvantages is that you don't have full decision-making power because you'll mostly do what you're told, and that's what the board is in charge of. The goal is the collective interest that your property looks a certain way according to already established standards, and you pay for it;

• Troubled neighbor relations – There may be disagreements in certain decisions among community members. For example, someone will complain about disobeying the rules, or an intrusive attitude that some members have, and this can lead to disagreements;

• Failure to pay dues is an enormous risk – the HOA has every right, plain and simple, to revoke your membership if you don't pay your dues on time because you don’t have the money or if you lose patience with working by someone else's rules. This could lead to other legal consequences.

Would You Become an HOA Member?

If it seems convenient and profitable for you to share common interests in property with other people, and at the same time you want to increase its value, you have the opportunity to become a member of an HOA by buying a house that is governed by one. It's as simple as that.

But first, you need to buy property in an HOA-run community. And SleeveUp Homes can help you. We will buy your old house for top dollar, regardless of its current state, helping you finance the new purchase.

You don’t pay for repairs because we take care of them in-house and don’t pay realtor commissions because we skip the middlemen and buy directly from you. If you wish to get the best price for your property and close in as little as 7 days, request a cash offer and see how much you can get.

Author:

Zachariah Peterson , CMO /

Zach has broad experience in marketing, technology, and finance, and he has held leadership positions at multiple startups since 2017.

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