Apr 29, 2022

What is a Homeowners Association?

Nat Miller

If you’re going to be moving into a planned community when you retire you’re probably going to encounter a homeowners association (or HOA). Even if you are already familiar with the concept of a homeowners association from previous home ownership experience (there are roughly 355,000 HOAs in the country, covering roughly 25-27% of the population), it’s good to brush up on what they are and what they do before relocating to a planned community, whether it is 55-plus age restricted or not. Because the particular duties and requirements of each HOA are different, and because these organizations can have such a large impact on your retirement living experience, it’s important to make sure you understand what questions to ask and what to look for when evaluating an HOA in your retirement destination.

What is a homeowners association (or HOA)?

So what exactly is a homeowners association, or HOA. An HOA is an organization associated with a planned community or condominium that makes and enforces rules for the community, largely related to what residents can do with their properties in the community. So, for example, if you wish to put a pool in your front yard or paint your house a particular color, you will likely have to take it up with your community’s homeowners association. However, while many people may know that HOA’s will govern big things like the color of your home, people are sometimes shocked to find out how specific HOA regulations can be, governing things like the maximum allowable height of bushes or what what cars you can park on the neighborhood streets (it’s not uncommon for an HOA to ban parking RV’s on the street, for example). HOA’s will also do things to care for and maintain the shared community property such as hiring gardeners or other maintenance workers as well as overseeing the budgets that provide for things like shared, community-wide amenities. 

Some homeowners associations maintain luxurious community-wide amenities like golf courses and clubhouses.

Generally, joining a community’s homeowners association is a requirement for owning a home in that community. Homeowners associations are formally incorporated legal bodies, and are therefore regulated by state law (although the manner of regulation changes from state to state). Generally, homeowners associations have the power to enforce their regulations by fining noncompliant residents or restricting their access to certain community amenities, although this will of course depend not only only the state where the community is located but also on the specific manner in which the community’s HOA was set up.  

Who runs a homeowners association?

Many planned residential communities and condominiums make it a requirement of home ownership that you become a member of the homeowners association. The leadership of a homeowners association is generally a board of directors or governors who are elected by the members to oversee and enforce the community’s rules as well as to help oversee any additional duties that particular HOA may have (such as providing for gardeners for the residents, for example). The HOA’s rules and regulations are generally set out in a document called the Declaration of Covenants, Conditions, and Restrictions (generally known as a CC&R), which is largely related to things like conditions for land and property use (such as restrictions on what color you can paint your home). This document will also generally establish the limits of the HOA’s power, in particular establishing things like what fines or punishments are associated with  noncompliance with HOA rules or failure to pay fees.

How much do homeowners associations cost?

So who pays for all the things that homeowners associations do to keep their communities running? You might have guessed it, but you do! Homeowners associations charge their members fees, which in turn go to helping maintain the condition of the community, and generally charge their residents on a monthly or quarterly basis. One thing that is important to keep in mind when looking at planned communities is that the amount of HOA fees, as well as what they cover, differs widely from community to community. While some HOA’s may do very little, others may take care of all their residents’ lawn care and maintenance requirements or maintain luxurious amenities for the community. As with most things, the more your HOA provides, the higher the HOA fees are likely to be. 

Another thing to keep in mind is that communities will sometimes offer different HOA rates based either on a choice of amenities (such as charging less for those who choose to forego a golf club membership), or by neighborhood - with certain subdivisions within the community paying more or less for various features (a common example we will see is a subdivision with larger lawns paying more for lawncare). In other cases, communities may break down HOA payments into several segments, with one payment going to the overarching community HOA, with another payment going to a local, neighborhood level HOA. All these variations make it important for you to confirm the structure of any HOA’s before moving into a community. 

Make sure to understand your rights and obligations under your HOA's governing documents.

All that being said, a good rough ballpark to at least use to start thinking about your eventual HOA payments is $200-$400 per month, although again these numbers can vary a great deal based on the community and the level of services and amenities that are offered. What is most important is to make sure you understand exactly what you are paying for, and what you are getting, as part of your HOA membership before moving in to any residential community, as your HOA payments are likely to be a non-negligible amount of money each month. 

Are homeowners associations worth it?

Like with many things in life, whether or not it will make sense for you to live in a community with a homeowners association will depend largely on personal preference. For many people the regulations and fees are a small price to pay for having an organization that makes sure that the community is taken care of, well run, and in great physical condition. When you consider that many HOA’s do things like take care of all their residents’ lawncare or maintenance needs, or maintain stunning amenities like professional golf courses and clubhouses, it’s no surprise that so many people love living with an HOA. That being said, HOA’s are not for everyone and so it’s important to consider whether you think that the benefits will outweigh the burdens of complying with any additional regulations imposed by the community, as well as the cost of the fees.

If you want some more advice on how to think about the pros and cons of living in a planned community with an HOA when you retire, give us a shout at info@sunboundhomes.com, we’d love to hear from you.

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