Why Homeowner Associations Exist
Homeowner associations were put into effect to help neighborhoods maintain a look of uniformity and keep property values at their highest possible levels. Prior to the institution of homeowner associations, builders and city officials were bombarded with neighborhood complaints about yards, parking issues and other major factors that detracted from the beauty of a neighborhood. A homeowners association gives control back to the individuals who reside in a community by creating rules and regulations that homeowners must follow and abide by or face fines and penalties. This also allows neighbors to be active in the community that they reside in, by providing them an open forum for complaints or neighborhood improvement suggestions.
Why Homeowner Associations Are Important
No set of rules will be the same from one homeowners association to another. The value in having a homeowners association is to create an environment that would prohibit neighbors from painting properties in bright, neon colors, parking in the front yard or doing other similar things that would detract from the overall appearance of a community. Homeowner associations have deeds, covenants and restrictions for a neighborhood that help to keep the neighborhood beautiful. They also manage community common areas in residential developments, such as pools or community parks. Having homeowner associations regulates and maintains the beauty of the neighborhood, and the upkeep of common areas keeps the residents happy and living peacefully.
All homeowner associations require dues from their residents. This will vary from one community to another. In some areas, there are multiple HOAs for a community, in which multiple dues will be collected. Dues can range from $50 to $1,000 or more per year, depending on the community and its amenities. The dues for any HOA are not included in the mortgage payment and are billed separately to the homeowner either on a monthly, quarterly or annual basis.
The Power of an HOA
Homeowners associations are granted certain powers over the residents of a community. For example, if a homeowner fails to pay his dues on time or bring the dues current, the association can place a lien on his property. Should that lien exist for a long period of time, the homeowners association can foreclose on the homeowner and evict him from his home. This rarely occurs; however, it is within the homeowners association's rights to do so.
Additionally, if homeowners violate the deeds, covenants and restrictions of the homeowners association, the association can impose fines on that homeowner, over and above the typical dues that they would owe. Depending on the severity of the infraction, fines can range from $25 to $10,000 or more. Should the homeowner fail to bring her property back into compliance with the neighborhood standards, the HOA can proceed with legal methods to evict the owner and foreclose on the property.
Prior to making a home purchase, discuss with a real estate professional whether the neighborhood has a mandatory HOA. Find out the fees, and get a copy of the deeds, covenants and restrictions so you have a list of "dos and don'ts" you can review. Purchasing a home is more than just buying a piece of property; it's buying into the homeowners association as well. Do yourself a favor, and become an informed consumer, prior to making a large investment.