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What is a 'Homeowner's Association - HOA'

A homeowner's association (HOA) is an organization in a subdivision, planned community or condominium that makes and enforces rules for the properties within its jurisdiction. The purchase of the property automatically makes the homeowner a member of the HOA and dues are required. Some associations can be very restrictive about what members can do with their properties.

BREAKING DOWN 'Homeowner's Association - HOA'

Homeowner's associations (HOA) are formed by planned communities with single-family homes or multiple unit or condominiums. An HOA is typically established to make and enforce rules regarding the properties within the jurisdiction. Most HOA are incorporated and are subject to state laws. The association has a board of directors that are elected to enforce and oversee the HOA governing documents. Membership in an HOA is usually a requirement for the purchase of certain properties.

Restrictions of an HOA

Homeowners associations can also have significant legal power over the property owners in their jurisdiction. The governing documents or covenants set certain conditions on the property and owners. The conditions may include structural restrictions such as the type of fences or landscape allowed or minor selections such as the color of paint on a house.

Cost of an HOA

HOAs also collect monthly association fee or annual dues to pay for upkeep of common areas like parks, tennis courts, elevators and swimming pools. They can impose special assessments on homeowners when the association lacks sufficient reserves to pay for unexpected repairs on common areas such as sidewalks or parking lots. They can also place a lien on a property if a homeowner falls behind on his dues, and penalties can be imposed for breaking the rules.

Benefits of an HOA

HOA members generally aim to maintain a standard of appearance for the property, and the HOA provides the regulations and guidelines for the community. The HOA management services may provide amenities such as landscape, pools and tennis courts that are available for all the HOA members. The community standards should support stable property values. There are architectural standards that are designed to keep a uniform appearance to the property. Some HOA fees cover the cost of trash collection and snow removal.

Disadvantages of an HOA

The negative side of belonging to an HOA includes issues such as the high cost of the association fees. This expense could act as a deterrent for future homeowners. HOAs have also been deemed too restrictive for some homeowners, who may want the freedom to customize their properties. HOAs need to reach a consensus regarding common property decisions such as maintenance and upgrades, so there could be conflicts to resolve among HOA members.

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