how homeowners associations hoas work
homeowners associations hoas are usually formed within communities or neighborhoods of single family homes or multiple unit buildings such as townhomes or condominiums an hoa is typically established to make and enforce rules regarding the properties within the jurisdiction hoas are composed of and run by the community s residents membership is usually a requirement to buy a home within a community where an hoa has been established an hoa usually has a board of directors or governors these groups are elected to enforce and oversee the hoa s rules and regulations an hoa typically describes its rules as restrictive covenants in a document called a declaration of covenants conditions and restrictions cc rs cc rs set certain conditions for owners about the maintenance of their properties 1these conditions sometimes include structural restrictions such as the type of fences or landscape allowed but they may also include more minor aesthetic choices like the color of paint on a house a cc r document may also outline the penalties for violating the guidelines set forth in the agreement these penalties can take the shape of fees or forced compliance in some cases it may even be as drastic as litigation homeowners association hoa feessome hoas can wield significant financial and legal power over the property owners in their zone hoas collect monthly or annual hoa fees these fees depend on a number of factors including the fees are typically 200 to 400 per month but they can range anywhere from less than 100 to upward of 10 000 in luxury neighborhoods or communities hoa fees also often contribute to the association s reserve fund which is set aside for major renovation projects or emergency use in addition to regular fees hoas can also impose special assessments on homeowners when the association lacks sufficient reserves to pay for unexpected repairs on common areas such as sidewalks or parking lots the hoa s board is usually responsible for the organization s finances as such it oversees the collection and management of funds along with setting dues and assessments the board can slap fines on homeowners who break the rules or damage the common areas in addition to imposing penalties hoas can also place a lien on a property if a homeowner falls seriously behind on their dues existing hoa liens can make it difficult to sell the home unless they are cleared homeowners associations hoas vs community associations vs property owner associationsmost hoas are incorporated this means that they are subject to state laws however some states consider condominium based hoas often called condominium communities and organizations governing cooperatives called co op boards to be distinct entities from hoas this distinction is made on the assumption that the property interests of these organizations differ as a result the designation community association serves as a broader umbrella term that encompasses hoas condominium communities and co op boards 1however an hoa is distinct from a property owners association this organization is a more broad term that usually refers to a group of people who want to better their community and the real estate values of the property in their community the main difference between them and hoas is that property owners associations may include anyone in the community with an interest in the value of the community s real estate including individuals who aren t homeowners the number of hoas in the united states as of 2023 according to the foundation for community association research a trade organization lobbying group the foundation estimates that 75 5 million americans reside in a community association neighborhood or property 2advantages and disadvantages of homeowners associations hoas the hoa provides regulations and guidelines for its members these standards are upheld with the aim of preserving and enhancing the community s property values the guidelines are often appearance oriented so they deal with regulations for the cleanliness of the property the condition of the property and any repairs done to the property usually the guidelines for hoas are designed to help ensure a uniform appearance for all the properties included in the association s zone the hoa management will typically provide additional services for its members in exchange for their hoa fees these amenities are available for all hoa members and may include some hoa fees may also cover the cost of trash collection and certain utilities on a more theoretical level hoas are symbolic of self governance and democracy for certain individuals this belief may stem from the idea that the best people to manage a community are the people living in it as opposed to a landlord who doesn t live on the premises one disadvantage of an hoa is the high cost of the association fees which could act as a deterrent for some prospective buyers also the hoa rules and regulations can seem unreasonable arbitrary or too restrictive for some homeowners who may want the freedom to customize their properties hoa board members are normally volunteers and they may not be properly trained to manage real estate deal with complex financial issues or unite a disparate group of people for a common cause because the leadership of hoas must reach a consensus when they are making decisions about maintenance and upgrades it is also possible that there may be conflicts among hoa members who disagree set and enforce community rulesprotect property valuesprovide services amenities and facilitiesoffer self governanceimpose fees dues and assessmentsmaintain restrictive regulationsoperate inefficientlymay be run amateurishly or ineptlyexample of a homeowners association hoa individual homeowners may conflict with their hoas one thorny issue in particular relates to the installation of solar panels hoa boards often don t like them fearing they hurt property values in 23 states they re allowed to forbid homeowners from adding them to their residences 3in 2020 an electrical engineer residing in blaine minnesota applied for permission to add solar panels to his house in october of that year the hoa rejected his proposal citing aesthetic concerns the panels were too visible from the street and the lack of established guidelines for rooftop solar in the association s bylaws 3the electrical engineer joined a group of homeowners and solar advocates who are asking minnesota lawmakers to support a bill that would allow homeowners associations to regulate but not ban the installation of solar thermal panels on single family homes introduced in the minnesota house of representatives in early 2021 it is one of a series of similar bills proposed since 2014 but never passed 43