Tips & AdviceWhat is an HOA?

What is an HOA?


What does HOA mean and why do you need to know about it? Well, that’s a great question! One that we’re going to answer within this article – and pretty much everything else you ever wanted to know – and then some, about the HOA. If you’re in the market to buy a house, whether now or in the future, this is critical information to know and understand. 

Buying a House

Buying a house is part of being a responsible adult. Most people, at least in this country, grow up assuming that one day they’ll be a homeowner, and it becomes a common goal. Not only is this a healthy outlook; it’s the American dream. Buying a house is likely the largest purchase you will make and will represent your most significant asset. However, no one ever educates you on how to buy a house wisely. And yes, there’s definitely a right way and a wrong way! If you want to keep it, that is. Therefore, if you’ve been preparing to buy a house, educating yourself is a great place to start.

What is the HOA? 

HOA stands for Home Owners Association, and if you’re buying a house, it pays to know if the house is in a community that has one. This will be a very important point because if you buy a house in a community with an HOA, you’re almost always automatically a member upon purchase – and there are monthly fees you’ll be required to make. Approximately one quarter of all houses are covered by an HOA, and you would never know which ones are which, just by looking. Common other terms include POA (Property Owners) and COA (Condo Owners), but all are used to describe the same structured associations.  

Typically, an HOA is made up of members of the community within the association, who are elected to a Board of Directors. This board writes all rules and requirements for homes in the community and uses the funds from the monthly fees to help maintain the upkeep of the common community areas around it. For residential areas, this could be dog parks, swimming pools, etc. But often, this includes condos, sometimes called COAs instead, and involves common grounds of the building and shared amenities.

The HOA makes specific rules for homeowners in the community, as well – so, if the house you want is in an HOA neighborhood, it pays to find out these rules – before you get any further in the process. Every HOA is different, especially when it’s run by the residents – and some rules are strict and confining, while others are more relaxed, and make perfect sense. Request a copy of the rules, known as the CC&Rs – Covenants, Conditions, and Restrictions. We’ll cover these in more detail, further on in the article. 

What Do I Get Out of the HOA? 

Ok so let’s say your dream house is in a community with an HOA. Your astute real estate agent (hopefully!) lets you know when showing you the house. If buying the house automatically enrolls you and fees are mandatory, how much is too much – and what do you get for the money? These are good questions, so let’s address them. First of all, know that every HOA is different, as aforementioned, and this applies to their fees and what they cover, as well. Here’s an idea of what many cover, or what could be covered: 

  • Municipal services – such as trash removal  
  • Association insurance – for common areas (you still need homeowners insurance for your home and property)
  • Maintenance and repairs – this includes common areas, such as community swimming pools, sidewalks, neighborhood roads, snow removal, as well as multiple other things 
  • Amenities and services – if the home is in a high-end development or condo building that provides amenities, HOA fees can go up to several thousand dollars a month, depending on the level of amenities or services offered 
  • Reserve funds – a well-planned HOA will have a certain amount going into a reserve fund so that when an unexpected expense comes up for the community, there will be enough money to pay for it 

These are just a few common things covered. Typically, HOA fees are between $200-$300/per month, but they can reach over $1,000 – it really just depends on where you live and what is offered. If you’re considering a home in an HOA, the best advice is to include the fees in your calculations of what you can afford each month. This is especially important because if you don’t pay your HOA fees, like the mortgage lender, they can foreclose on your home! This is why it’s just as important to pay your HOA fees as it is your mortgage payments, every month. 

Lastly, you can be assured that HOA fees will never be “too much” because it is illegal for them to charge more than what’s required to maintain the upkeep of the building or development’s common areas, etc. These associations are generally structured as non-profits and thus cannot be exploited for the purpose of making money. 

The History of the HOA 

So what is the meaning of an HOA, and how did they start? Some of the first HOAs were started in L.A. County, in Pasadena back in 1905, and in L.A. in 1916. They were established in high-end developments and set the legal precedent for zoning areas specifically for upscale, single-family homes that restricted home ownership to exclusively white people, in many cases. Deed restrictions and covenants were established to control who could buy homes in specific areas. In 1948 the U.S. Supreme Court ruled those types of covenants as legally unenforceable. However, the practice was still alive through private contracts until the Fair Housing Act was passed in 1968, making them illegal. To this day, discrimination still exists in certain areas despite that being the case. 

These associations were started by the developers and typically apply to multifamily, planned developments – whether homes, condominiums, or co-ops – for the purposes of marketing, managing, and selling units in the development. The developer typically transfers control of the association to the homeowners after selling a certain number of predetermined units. Most of today’s associations are incorporated nonprofits and subject to statutes that govern nonprofit corporations and HOAs for whatever state they’re in. Though some associations operate outside these laws, if the board of directors is notified they’re operating outside the statutes that apply and don’t correct it, they can be sued for willful misconduct. Since 1964, HOAs have become more and more common in the United States. And the fastest-growing form of housing today is CIDs or common interest developments. 

Primary Goal of the HOA 

Today, the primary goal of the HOA is to preserve property value in a development. Whether that be in a residential community of houses, a condominium development, or a co-op building, homeowners have one thing in common: they’re all interested in preserving and raising property value. The rules set forth are supposed to be carefully written and designed for this purpose. However, there have been many cases reported of boards that set rules arbitrarily and are extremely difficult to deal with. Some of an HOA’s CC&Rs can be notably restrictive or even outright ridiculous, and the state’s oversight is minimal unless an extreme case is brought to their attention. Let’s talk about CC&Rs in more detail, to illustrate this point. 

CC&Rs and Rules & Regulations 

The Declaration of Covenants, Conditions, and Restrictions, better known as CC&Rs, are used by CIDs to regulate the use, appearance, and maintenance of the property, and the land, where applicable, in question. They are typically drafted by the HOA’s board, and they limit what you can do to your own property. A covenant differs from a zoning ordinance because it’s made between private parties, therefore is enforceable by the HOA, or by a single homeowner against another homeowner. Covenants are recorded in private deeds and are voluntary – until you sign an agreement to keep them, of course. 

You’ll also want to get a copy of the Rules & Regulations, as that’s where everything goes that isn’t covered by the CC&Rs. The CC&R is a legally binding document that’s recorded with the state and difficult to change, whereas rules and regulations can be changed by the board of the association, after a 30-day review by community members. According to Investopedia, interested buyers should also take a look at the Bylaws of the HOA in question as well, to see how fee structuring works, how often they can be raised, etc. You or your realtor can request these documents anytime. 

Common CC&Rs

Here are some examples of common restrictions that may impact your desire to purchase: 

  • The color of the paint you can use on your house – this could be the exterior of a house or the interior of a condo or co-op
  • Types and colors of window coverings you can use
  • Type of mailbox you can have
  • Type of shingles or roof coverings you can use
  • Exterior fixtures you can have (i.e.; basketball hoops, satellite dishes and antennas, lights, flags, etc.) 
  • Whether you can have a garden, plant a tree, etc.
  • Whether you can have an above-ground pool or a swing set, etc. 
  • Keeping your lawn mowed or trash can rolled in 
  • What pets you can have (or not have)
  • Type of fence you can have (or not have)
  • Whether you can have overnight guests or not, where they can park, and for how long 
  • Whether you can park a boat, RV, or any other vehicles in your driveway or parking spot, or not 

You get the idea. And here’s the clincher: if you break any rules outlined in the CC&Rs or Rules, you can be fined. You’re also responsible for remedying the problem immediately, or be fined additionally every day after!

HOA Nightmares

If you think those rules are crazy, just imagine some of these crazy HOA rules and the poor residents who had to live – and learn, by them. One particularly expensive building in a hip area in New York City has a requirement that tenants be “on the verge” artists, and further has a “no high heels” ordinance due to noise! In Rancho Santa Fe, California, an HOA fined a man for “exceeding the number of approved rose bushes” on his property. This man fought the board, who continued to enforce the fines and threatened to foreclose on his home! They went to court over it, and guess who won? The board. A judge ruled that the man was in “violation of the HOA rule relating to the community’s architectural design.” That’s crazy. Or how about the elderly lady who had a Cocker Spaniel at a condo in Long Beach, California, and one of the rules was “pet’s feet never touch the floor in common areas.” The woman was fined $25 every time she walked through the lobby without carrying the dog. As you can imagine, the forgetful lady racked up hundreds of dollars in fines and was eventually forced to move. 

Or how about the man in Raleigh, N.C. currently in court over a dog snack station where dogs can stop and get treats and water? The very small stone dog’s head with a plastic container of treats in its mouth is placed on a strip of landscaping between the sidewalk and the street. This is technically the city’s property, which is specifically addressed in the HOA’s CC&Rs as being not in their power to control. Additionally, the tasteful “snack station” has been there for 5 years, with no complaints from either residents or the city. But in 2020, the Bedford at Falls River HOA began threatening him and has now started a lawsuit. The board finally agreed to allow the station on his front lawn instead and is now requesting that he move the station there. The board also states that its reasoning is to “maintain and preserve property values.” The case is currently in process. 

And let’s do one more for good measure. A story in one article about ridiculous HOA rules, a member in an unnamed community wrote a story about how their HOA board had a thing about dog leashes and had both called Animal Control on members for having leashes too long and for having them too short! But they tried that with one resident they shouldn’t have messed with. The man was not only a retired Marine with lots of time and money on his hands but also the most popular resident in the community. First, he had a huge pool built in his backyard, which wasn’t against the rules, and then he let everyone use it for free so that the community pool the HOA charged an extra fee to everyone who wanted to use it was rendered obsolete. Then, he had a huge, loud, all-inclusive party with individual menus for everyone, and when police came to check out the noise, they all left smiling with to-go bags of food. Meanwhile, the board president was enraged at his direct challenges and became obsessed with taking him down. But one day she was caught trying to break into the man’s home. After that, she was ousted and everything changed in the formerly all-white neighborhood to a diverse, happy place to raise a family. The man went on to start his own restaurant, sponsor a drag competition, and possibly took up karate, the member stated. Now that’s a crazy story!

Final Tips and Facts Regarding HOAs

But not all stories get that “all’s well that ends well” finality. Therefore, be extra careful if the home you fall in love with is in an HOA. Be sure to read the HOA’s CC&Rs, Rules & Regulations, and Bylaws thoroughly, and if you’re unsure, consult with a real estate attorney. The facts are, that new statistics show that 53% of all homeowners in the U.S. live in an HOA community. Not only that, but 80% of newly constructed homes in 2020 were part of an HOA. There are roughly 22 new HOAs formed every day, and over 4,000 each year. This country is definitely going in this direction, moving forward. 

There are ways to make changes to all the different things we’ve discussed about the HOA, but they are lengthy, tedious, and difficult. Plus, you need a majority of residents to agree with what you want to change. But that’s a topic we’ll save for another day. We sincerely hope you’ve gained some knowledge you’ll be able to use one day. As always, happy house hunting! 

Rochelle Harris
Rochelle Harris
Rochelle Harris is a passionate writer originally from Phoenix, AZ. who credits her success to integrity and determination. She has a great sense of humor, loves music and her family, and writes fiction and poetry in her spare time. She is excited about the New York experience and lifestyle!

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