What You Need To Understand About Homeowner Associations

When you purchase a home in a Condominium Project or a Planned Unit Development (PUD), you generally have to deal with a Homeowners Association (HOA). And, this HOA can play a huge part in the look and feel of your home.

San Jose Housing Tract
Tract Housing in California

 

What Is A Homeowners Association?

 

  • An HOA is an institute that a real estate developer creates in an effort to improve, manage and sell the homes.

 

  • It lets the developer to get out of both financial and legal responsibility for the community, generally by transferring association ownership to homeowners after they sell of a predetermined amount of lots.

 

  • It lets the city to boost its tax base and decrease the services it would typically provide to non-homeowner association developments.

 

  • The majority of homeowners associations are assimilated, which mean they’re subjected to state statutes that pertain to non-profit corporations and homeowners associations.

 

  • There’s very little state oversight, usually taken in the forms of laws that are not consistent from one state to the next.

 

What Are The Positive and Negative Aspects of HOAs

 

  • HOAs have the power to dictate what color our home should be, the amount of pets you can have and what kind of grass that’s permitted.

 

  • They can also impose fines, dues and assessments – they may also collect a few dollars annually to ensure the grass is cut in common areas.

 

  • Covenants, Conditions and Restrictions (CC&Rs) set HOAs up and are included in your deed. The CC&Rs mandates the way the HOA works and what the guidelines are that must be obeyed by homeowners, guests and tenants. It’s important that you look what the CC&R guidelines are before you purchase a home to ensure it meets the lifestyle you want to live.

 

  • For example: If you own your business, the CC&R may dictate that your business is not allowed. If you have three dogs and two cats, you could be informed that only one pet per household is allowed.

 

  • Bear in mind that CC&Rs are just one part of the HOA.

 

  • Another part of HOA are bylaws, which must reflect the association’s intent.

 

  • HOAs have either a managing Board of Directors or third-party property management company.

 

  • Look at potential assessments.

 

  • For example, a Condo Association recently had an issue with foundation and assessed each unit member more than $10,000. Another PUD owned a pool that needed routine maintenance and be certified.

 

  • PUDs are usually set up in subdivisions with a homeowners association along with it.

 

  • The builder is generally the head of the HOA until completion of the subdivision. Once completed, management is then turned to the homeowners during a special membership meeting.