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.
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.