Do you know why you pay HOA dues every month, quarter or year? Many people pay it, but truly don’t know what the HOA is or why it even exists. Aside from increasing your cost of home ownership, HOAs offer some important benefits.
What is an HOA?
First, let’s clearly define the HOA. The homeowners association is an organization that oversees condominiums, townhomes, or specific subdivisions. People that buy a home or unit within the HOA, automatically become a part of it.
HOAs have a board of directors, typically elected by the homeowners. The board creates rules and regulations. All homeowners must follow these rules and pay the appropriate dues. Some associations also call a special assessment in extreme circumstances to fund special projects or maintenance. Common examples include funds for roof replacement or damages by storms.
History of HOAs
HOAs started in the mid-19th century in Levittown, a Long Island community created to provide veterans with low-interest housing. Since then, more associations were created, especially upon the emergence of residential development. As more people began moving to the suburbs, the demand for housing increased.
The communities’ popularity sped up quickly, encouraging real estate developers to build homes closer together or on one parcel of land. With common recreational areas, more homes could be built in small areas. The cluster of homes would be appointed an association, which would govern the common areas and the homes themselves.
Why HOAs Were Created
HOAs were created for a variety of reasons:
- Helped developers maintain a certain level of quality while passing off the daily operations to another organization.
- Alleviate the burden on the municipality that would otherwise have to oversee the services provided
- Provided one contact that managed all maintenance and repairs for common areas
- Help increase property values with proper maintenance, repair, and beautification of the community
What HOAs do for Homeowners
Overall, HOAs provide the rules and regulations for the community. The standards help maintain the area’s beauty and value. In addition, HOAs can offer homeowners:
- Landscaping in common areas
- Maintenance of parking lots
- Provide and maintain pools, work out facilities, and tennis courts
- Provide a central area for meetings and parties
- Trash collection
- Snow removal
- Landscaping services
- Maintenance and repairs of common areas and exterior features of condos and townhomes
- Set and enforce rules
- Help alleviate resident’s concerns
- Assign penalties for bylaw breaches
- Elect board members
- Hold meetings for members
- Create and follow a budget
- Keep a reserve fund
- Purchase and maintain insurance
- Handle emergencies
Ultimately, HOAs help maintain property values. A properly ran HOA creates rules and regulations that prevent negative factors that drop a home’s market value. While rules may seem extreme or offensive, in the end, they keep the area uniform, protected, and aesthetically pleasing.
Before you buy a home, always inquire about the HOA. Make sure it’s a well-run organization with plenty of reserves and competent board of directors. The right HOA can foster a sense of community and help enhance the value of your home.