HOAs, or homeowners’ associations, are a staple of suburban America. In the U.S. in 2018, there were 347,000 associations, covering 26.9 million residences, according to the Community Associations Institute. But first off, who exactly is an HOA? Also, what do they do? Where do they have jurisdiction? And finally, why even have a homeowners’ association?
Who is the HOA?
A homeowners’ association, or HOA, is a governing body. It is responsible for maintaining commonly-owned areas within its subdivision. It is also responsible for enforcing the subdivision’s covenants, conditions, and restrictions, or CC&Rs, and abiding by its bylaws.
HOAs are comprised of a board of directors. Each of these (Usually) unpaid, elected positions typically has a specific function, such as:
- Vice president
Depending on the features of your subdivision and structure of your HOA, there may be additional positions, such as:
- Facilities director
- Pool director
- Recreation director
- Social director
Board members are almost always residents of the subdivision governed by the HOA. This is definitely a good thing. It means that the bylaws, CC&Rs, and performance as board members affect the board just as much as other residents. As a result, board members have a vested interest in the success of the HOA and subdivision.
Almost all HOAs are organized as corporations, and are treated as nonprofit organizations by the government.
Some boards choose to hire an HOA management company to lighten the burden of administrative duties on board members. In that case, the board grants the management company the power to perform some functions on behalf of the board, in compliance with CC&Rs and bylaws. Therefore, a management company may be the face of your HOA.
Why have an HOA?
In the most basic sense, the purpose of an HOA is to protect home values in the neighborhood it oversees. This is achieved in a variety of ways. First, the HOA maintains and enforces a pre-determined standard for member homes. Another way is by maintaining the assets and amenities of the neighborhood. In addition, they manage the finances of the homeowners’ association. Finally, they also provide services for residents, such as social functions, contractor selection, etc.
The purpose of a board of directors is to designate a group of people to make decisions on behalf of the other homeowners who make up the HOA. This may seem unfair at first, since decisions are made by a small group of people. Yet, given some thought, it makes a whole lot of sense. Why?
Think of it this way. My neighborhood HOA includes about 300 homes. Can you imagine 300 families trying to decide which contractor to hire to cut the grass at our park? I can. And it’s not pretty! Therefore, it’s better to leave those smaller decisions to a trusted board of directors. Also, big picture decisions are often made at HOA meetings by a vote of all member households in good standing. As a result, those who aren’t board members still get a say in bigger decisions.
What does an HOA do?
As stated above, the purpose of an HOA is to:
- Maintain and enforce standards
- Maintain neighborhood assets and amenities
- Manage HOA finances
- Provide member households with relevant services
What does that even mean, you ask? Let’s take a closer look.
Maintain and enforce standards
Have you ever seen a bright pink house? It probably wasn’t approved by an HOA.
One of the first orders of business when an HOA is formed is to establish covenants, conditions, and restrictions (CC&Rs) and bylaws. A quick distinction: In general, CC&Rs regulate what you can and cannot do as a homeowner, while bylaws regulate how the HOA and board of directors conduct business. Bylaws can also sometimes contain additional or amended restrictions and regulations, enforceable by the HOA along with CC&Rs. For our purposes today, we’ll use “CC&Rs” to refer to any rules, regulations, and restrictions on an HOA’s books.
CC&Rs establish visual (And sometimes behavioral) standards for homes within the neighborhood. Depending on your neighborhood’s CC&Rs, your home may be regulated a little or a lot. Here are a few of the more commonly regulated features:
- Exterior paint color (Our pink house above maybe isn’t part of a homeowners’ association…)
- Roofing material
- Exterior home condition
- Grass length
- Trees, shrubs, and other plants and landscaping
- Outdoor trash can location
- Commercial vehicles parked overnight
- Storage of trailers, RVs, and watercraft
- Storage sheds
How CC&Rs might be enforced
How the HOA enforces standards depends on your neighborhood’s CC&Rs and bylaws. It can also depend on city ordinances. For example, if an issue such as grass length is regulated by both CC&Rs and a city ordinance, the board may notify the city and ask them to enforce their ordinance.
If there is no overlap between CC&Rs and city ordinances, the board is responsible for enforcing standards in the CC&Rs. They may do this with a phone call, visit, or formal letter, depending on the CC&Rs and bylaws.
If a homeowner repeatedly fails to comply with requests to fix violations, the homeowners’ association may take legal action. This could include filing a lien against the property, having a letter drafted by an attorney, or suing the homeowner in court.
Maintain neighborhood assets and amenities
Neighborhoods entrust the care of their commonly-owned property to their board of directors. Much as you would guess, caring for common property is no small task. Depending on the amenities owned by your neighborhood, this can include:
- Swimming pools
- Tennis courts
- Playground equipment
- Green space
- Neighborhood signs
- Restroom facilities
- Ponds and lakes
- Trash cans
- Vending machines
- Walking or biking trails
Whoa, that is a lot to maintain! The board of directors (Or an HOA management company) is responsible for keeping neighborhood amenities in good condition. As a result, they hire and schedule lawn care, pool maintenance and repair, equipment deliveries, and seasonal cleaning tasks.
In addition, they are responsible for planning for large repairs or replacement of major elements, often called capital expenses. Examples of capital expenses include replacing a pool liner, resurfacing tennis courts, or re-paving a parking lot. Consequently, successful management by the board of directors is serious stuff, and should not be taken lightly.
Appropriately manage HOA finances
Speaking of expenses, another important facet of the board of directors is to appropriately manage the finances of the homeowners’ association. Finances are an asset, after all! This includes:
- Setting and collecting dues (Everyone’s favorite!)
- Pursuing collection of unpaid dues
- Getting the best possible price for the quality of goods and services the HOA needs
- Creating and following a sound budget
- Ensuring the HOA meets its financial obligations
- Maintaining the HOA’s financial accounts in good standing
- Avoiding wasteful and unnecessary expenditures
As a result, it takes a lot of effort to safeguard the neighborhood’s Benjamins. Because of the value and variety of assets and amenities board members are entrusted with, they shoulder a lot of pressure and responsibility. If your HOA’s finances are in good shape, maybe take the time to thank your board members. If not, well… let’s save that for another post.
Provide member households with relevant services
This can encompass a wide variety of issues and also depends on your particular neighborhood. Some examples include:
- Organizing social events, such as neighborhood barbecues, pool parties, and movie nights
- Negotiating contracts for trash service, if your CC&Rs require that 1 service be used by all
- Providing means of entry to secure facilities (Such as keys or swipe cards to pools and clubhouses)
- Scheduling and publicizing neighborhood-wide garage sales
- Organizing or sponsoring swim teams
- Maintaining a neighborhood website where members can find contact information, calendars of events, and CC&Rs and bylaws
Where does the HOA have jurisdiction to regulate?
This depends first of all on your neighborhood’s CC&Rs. It also depends on local and state laws regarding the power of HOAs and the enforceability of their CC&Rs. Suffice it to say, therefore, that if it’s outside, the HOA can potentially try to regulate it. …Try being the keyword (More on that below). While HOAs generally cannot regulate the inside of your home, some do require drapes or other window coverings. They can also potentially limit the type and number of pets you have.
What is and isn’t regulated varies widely from one HOA to the next. For example, some require formal landscaping, while others only want you to keep your grass cut and remove dead trees. Knowing what is and isn’t regulated is a great reason to get acquainted with your neighborhood’s CC&Rs and bylaws. Therefore, check your homeowners’ association’s website for the rules, or ask a board member for more information.
As you can see, there is a lot more to homeowners’ associations than many people realize! Homeowners’ associations have significant responsibilities. They can also have a significant impact on decisions regarding the look of your home, in addition to what you keep on your property. As a homeowner, it’s therefore imperative to understand the who, what, when, where, and why of your HOA:
- Who your HOA (And board of directors) is
- Why your neighborhood has a homeowners’ association
- What it regulates
- Where it has jurisdiction to enforce CC&Rs
In addition, understanding the how, plus the what of disagreements, are critical in interacting with your homeowners’ association:
- How your HOA works
- What to do if you disagree on an issue
- When it can force you to take action
Is there an HOA in your neighborhood? What experiences (Good or bad) have you had with yours? Let’s talk about it in the comments below!