Homeowner Associations

The purchase of a home is one of the most important financial decisions most people ever make and being in a Homeowners Association (HOA) may be a significant consideration. As a long time on-site HOA manager, the author has found that most buyers do not recogize that Homeowner Associations are contractural relationships that should be carefully evaluated and all documents read and understood. The purpose of this book is to provide information on Homeowner Associations, their benfits and possible pitfalls depending on the buyers objectives. Home ownership in the past few years has undergone a lot of changes where owners have desired shared amenities, maintenance of common areas and enforcement of neighborhood standards, while at the same time government has been reluctant to assume such responsibilities. In some States, it is estimated that close to 20% of homes are now located in Homeowner Associations. The expectations are that the growth of homes in Homeowner Associations will continue because many local governments do not want to take on the financial liability of new streets, parks, landscaping, etc. due to budget concerns. These communities with shared common area facilities are generally referred to as a Common Interest Development (CID) and need a managing entity, a Homeowners Association (HOA). As a property owner in an Association you are automatically a member of the Association of owners which is in charge of operating and maintaining the common area and services to its members. As a member, you must also share in the expenses by paying regular assessments to the Association. An HOA is generally a private, Non-profit Mutual Benefit Corporation in which all property owners automatically are members when property is purchased and will have certain rights and obligations. An Association runs things as a sort of mini-government, operating under the Covenants, Conditions and Restrictions (CC&Rs), originally established by the developer, and in some areas with additional regulations set by State Law. In an Association the majority rules and what the group wants, within parameters of the recorded documents, you have to accept or convince the group to change. As long as you own your property you are a member. An Association may only consist of a few units that share common walls or a driveway, or can be several thousand homes with private streets, clubhouses, hundreds of acres of common area landscaping and a variety of recreational facilities. Your interests as a homeowner are in concert with the continuing success of the Association. If the Association functions well, the lifestyle you have moved there for and your property values will be maintained or enhanced. If the Association is not well run, common area not well maintained or the community does not have a good reputation, property values may be lower. .