If a neighborhood has shared common areas, such as a parking garage, security gates, sidewalks, a swimming pool, tennis courts, or even a grass or garden beds in front of your neighborhood fence or wall, the neighborhood probably has a homeowners association or HOA. What is that and how does it affect you, as a resident?
HOAs exist to ensure that your community functions smoothly and looks its best, according to David Reiss, research director at the Center for Urban Business Entrepreneurship at Brooklyn Law School. If the community’s pool pump stops working or the gate is stuck open, someone needs to see that it’s fixed; HOAs are responsible for such issues, rather than having a neighborhood individual volunteer time and money to do or oversee repairs. In 1970, 1% of Americans lived in an HOA community; today the number is 25%, according to the Foundation for Community Association Research.
In order to cover maintenance expenses, HOAs collect monthly or yearly fees from all community members. Typical HOA fees will cost single-family homeowners approximately $200-$300 per month and may be considerably higher or lower depending on the services provided. Generally, the larger the home, the higher the HOA fee. Additionally, fees are usually somewhat more than required for monthly expenses so a reserve can be kept to cover emergencies or large expenditures. A special “assessment” or extra fee may be charged if reserves are insufficient to cover necessary expenses for repairs.
Every HOA has a board, comprised of homeowners in the community; the board is typically elected by the homeowners. The board members arrange for regular meetings so that owners can gather to discuss major community issues. All members are usually entitled to vote on major expenditures.
HOAs are responsible for ensuring that certain community rules are followed. These rules are known as “covenants, conditions, and restrictions” (CC&Rs), and homeowners should receive a copy when they move in and sign a contract agreeing to abide by them. CC&Rs may cover anything from the size and breed of pets to the type of mailbox and where it is placed. House paint color and type of curtains in street-facing windows may be regulated; the stated rationale is to maintain the neighborhood aesthetic.
Should you break the HOA rules or be delinquent in paying your HOA dues, consequences may be severe. Be aware and read your CC&Rs carefully!