What Is an HOA?

Renters Insurance Basics

According to the Community Association Institute (CAI), one in every six Americans lives in a community managed by a homeowners association. A homeowners association (HOA) is a not-for-profit entity that establishes and enforces the rules of a community. The main function of an HOA is to govern the common areas of a neighborhood, such as the parks, pools, roads, etc. The HOA determines the rules for these areas as well as the funds that will be devoted to them. In addition, the HOA creates a set of rules by which all members of the community must live. Typically, residents of the neighborhood pay monthly dues to the HOA in exchange for these services. Read on for further details on what an HOA is and how it can impact you.

Jurisdiction of an HOA

Though the primary function of the HOA is to oversee the maintenance and rules of communal property, the association also has the ability to govern the actions of individual community members. A homeowners association has the power to tell community members what may and may not occur within their homes. Most new developments are governed by an HOA, so if you prefer to live in a development without a homeowners association, you may want to look into older communities.

The Rules: CC&R

A homeowners association will establish rules by which residents must abide called the covenants, conditions, and restrictions (CC&R). These rules are enforced by a volunteer board of directors elected by members of the community. The CC&Rs will vary widely by community, but they usually cover things like where residents can park their cars, what colors houses can be, what kind of landscaping is permissible, and whether a home may be rented out. Some CC&Rs are so specific that community members may be sanctioned for things like putting up unapproved holiday decorations or planting the wrong type of grass.

The Sanctions

An HOA has the power to sanction residents for noncompliance with the CC&Rs. The homeowners association can assess fines and fees for violations of the CC&R. Homeowners associations can also file lawsuits against residents for violations that the homeowner refuses to correct. In the event that the HOA brings suit against you, you would be responsible for your legal fees as well as any other applicable fines. An HOA even has the ability to evict or foreclose on homeowners who do not comply with the CC&Rs or pay their dues.

Tips for Handling Your HOA

Usually, residents will not receive a copy of their HOA’s CC&Rs until they close on the home or apartment. However, if you request a copy of the CC&Rs from your landlord or real estate agent prior to move-in, it can be arranged. Review the CC&Rs carefully and ask about homeowners association dues. Once you move in, make your voice heard by attending HOA meetings. If you have an issue with the HOA, do not withhold your dues in protest. You will get stuck with penalty fines, legal fees, and possibly even foreclosure or eviction. Follow the procedures outlined in your CC&Rs if you have a dispute with your HOA.