What are HOA's and why do they matter?

Homeowner Associations, otherwise known as HOAs, are a very common kind of neighborhood organization here in America. If you ever plan on owning a home, chances are you will have to deal with one or two homeowner associations in your lifetime. Despite their wide spread though, HOAs will differ greatly from place to place in how they operate and what rules they enforce. Because of this great variety, it is important for homeowners to know what to look for when they move into a neighborhood, or better yet before they move into a neighborhood. Today, we will try and do just that. We are going to give you a quick overview of what an HOA is, what they do, and your responsibilities as a homeowner when it comes to your HOA. 

What are Homeowner Associations?

Let’s start with a simple one, what is an HOA. Well, at its most basic form, an HOA is a non-profit association of homeowners in any particular area (usually a neighborhood or two) that leads the neighborhood. They have no power over the municipal, state, or federal laws, but they do have jurisdiction over neighborhood specific rules. For most HOAs, the head of the organization is headed by volunteers who are elected by the whole association from the homeowners in the association. When it comes to voter eligibility each neighborhood’s rules will be different. Some neighborhoods might have a rule where all homeowner’s get to vote while others may have rules that only one of the homeowners of each property can vote and so on and so forth. So, it is best to figure out what entitles you to vote before you assume you will be able to.

HOA leadership will typically meet on a regular basis like quarterly or monthly to take care of neighborhood business. They will usually also hold regular association-wide meetings that allow all members to come and discuss big decisions, vote on certain topics, and so on and so forth. We advise that you find out quickly when and where you’re HOA meets so you can get involved right away.

What do Homeowner Associations actually do?

A homeowner association will usually take care of any number of the following 5 things: 1) maintaining or raising the value of the neighborhood, 2) institute and run the neighborhood watch, 3) maintaining common areas of the neighborhood, 4) create rules and regulations for the neighborhood and 5) put together neighborhood and community events and organizations. Though the leadership will decide on most of these issues with only big issues that come to the vote of the general members, it is still important to remember that an HOA is only as powerful as the neighborhood allows them to be.

The Value of the Neighborhood

The value of a neighborhood is very important to homeowners. It can have a great effect on their financial lives in many ways making it hard for them to look past a dropping neighborhood value. Now, the value of a neighborhood is dependent on several factors like the appearance of the homes and common areas, the identity of the neighborhood, the quality of life in the neighborhood and so on. Since this is a pretty vague description of their responsibilities this is where those horror stories we told you about start to creep in. In order to maintain the look, image, and reputation of the neighborhood, some HOAs have found it necessary to enact rules that are a bit over the top.

The reason this is important from a financial sense is because, if a homeowner wants to sell their home someday, they will want it to be worth more or at least the same as when they bought it. If it is worth the same they will break even, if it is worth more than they will make a profit. If it is worth less than before they will be losing money.

The Neighborhood Watch

Neighborhood watches are great programs for many reasons. It protects the people and property of the neighborhood, it will bring the community together, and it will make everyone feel much safer. An HOA should take the time to organize a neighborhood watch program as one of their top priorities. Usually, it will be taken care of by a group of volunteers from the neighborhood, but the HOA leadership needs to organize it first before handing that all off.

Neighborhood Common Areas

In almost every neighborhood, there are areas that are not owned by one particular person, but rather belong to everyone. These include neighborhood parks, signs at the entrances of neighborhoods, and so on. These all need to be maintained somehow and that falls under the responsibilities of the HOA. They can either pay for a professional service to come in and do the maintenance, or they can put together a volunteer program where members of the neighborhood take care of them.

Neighborhood Rules

This section is another where some of those infamous horror stories about HOAs start to creep up, however, when done with care and the consent of the rest of the neighborhood, this doesn’t happen. You see, a lot of the rules that HOAs institute are necessary for keeping peace in a neighborhood and can be enforced without causing rifts in relationships. Some of these rules will consist of noise ordinances, number of cars that can be parked outside your home for long periods of time, etc.

Neighborhood Activities

Whether it is a block party, a neighborhood yard sale, or anything in between, neighborhood activities and events are under the jurisdiction of the HOA. The more community events you have thought, the more your dues are going to cost, so if you want a lot of activities you may see a hike in the price of your dues.

Your Responsibilities to your HOA as a Homeowner

Just like as a citizen of a country, you need to make sure you are as informed as possible on what is going on with your HOA. You don’t necessarily need to know a detailed history of the HOA or what everyone is doing at all times, but you should know about meetings, issues, rules, and so on. You should also do your part to know the key people when it comes to leadership so you know who you can get information from if there isn’t anyone specifically assigned as a communications director.

Then, there are the HOA dues. Now, we know that another payment you have to make is never fun, but you need to pay them. Like we said earlier, the more money you put in the more events you can have, but it also determines what kind of services the HOA can purchase on behalf of the neighborhood.

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