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Home Owner Association Basics


 

A homeowners association (HOA), also known as a community management association, is a nonprofit organization that serves to:

  • foster a sense of community

  • govern rules in a particular community

  • maintain common areas of the property

  • provide services for the homeowners

If you buy a condo, townhouse, or single-family home in a community managed by a homeowners association, you must become a member of this HOA and pay dues.

Types of Homeowners Associations

Homeowners associations typically fall into three categories:

Condominium: In a condominium, homeowners own their unit, not the property boundaries or land. In addition, each resident owns a small percentage of the common area.

Cooperative: In a cooperative, a corporation owns the entire property, including the individual units. Homeowners have a shared interest in the property and exclusive rights to “rent” their particular unit. Cooperatives are rare, accounting for only 5 to 7 percent of all HOAs.

Planned community: Homeowners in a planned community own not only their unit but also the lot on which their property lies. The homeowners association maintains ownership of the common areas, such as the grounds, roads, and facilities. Planned communities are the most common type of HOA.

What to Expect from Homeowners Associations

People who own property run by a homeowners association agree to covenants, conditions, and restrictions (CC&R). The CC&R lays down the rules and establishes the monthly dues for all homeowners in the community. Some common restrictions in a CC&R include:

  • limits on the number of residents allowed in a single unit

  • noise ordinances

  • operating times for common areas, pools, and fitness centers

  • property improvements that are allowed (painting, gardening, etc.)

The CC&R is usually reasonable, and it exists to provide all community owners with a pleasurable living experience. Naturally, some have unreasonable expectations, so you should always read all the documents from the HOA before agreeing to purchase a home in the community.

Homeowners Association Advantages

Homeowners associations help maintain a pleasant community for their residents. The CC&R helps regulate the appearance of properties, the conduct of residents and guests, and noise levels.

Many community management associations offer playgrounds, pools, clubhouses, and gyms for their members. Others provide services such as landscaping and repairs.

Homeowners Association Drawbacks

An HOA exists to protect the rights of the residents in the community, but it can cause some inconveniences while doing so.

It also costs money. Homeowners association dues can be expensive. Depending on your home location (city/state), HOA fees can range from hundreds of dollars a year to thousands per month.

Another drawback is that some HOAs are intrusive, and some homeowners feel that they take away too much of their freedoms.

To add insult to injury, the HOA can fine homeowners who break the rules. Furthermore, if these fines aren’t paid promptly, the HOA can put a lien on the property and threaten the owner with foreclosure.

Regulations such as these created the nickname “Little Governments.”

Again, read each document from the HOA thoroughly and, if needed, consult an attorney to clarify anything you don’t understand.

Whether buying, selling, or seeking valuable insights into the market, I'm here to be your trusted guide in the dynamic world of real estate. Feel free to contact me for a confidential discussion, where we can explore your goals, address any questions, and navigate the exciting path of real estate together. Your real estate journey is unique, and I am committed to providing personalized assistance tailored to your needs. Don't hesitate to connect; your next real estate adventure awaits!

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Location: Ann Arbor, MI, USA

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