Homeowners Association (HOA) - Definition
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Homeowners Association Definition
A homeowners association (HOA), also known as a property owners association (POA) is an organization or a corporation that is typically formed by a real estate development body in a residential plan. The HOA is responsible for formulating and enforcing guidelines for the properties within its control. Membership to an HOA automatically commences with the purchase of a property within its authority.
A Little More on What is a Homeowners Association - HOA
Homeowners associations (HOAs) are typically instituted within community residential plans such as detached homes, apartments and condominiums. In the case of certain HOAs, it is mandatory for homeowners to obtain membership in the respective homeowners association before they are deemed eligible to purchase homes. While all HOAs possess their own individual sets of guidelines, a vast majority of them are incorporated, necessitating their members compliance to state laws. A few U.S. states make a distinction between condominium HOAs and other HOAs because of dissimilarity in interest rates between the residential plans. However, the term Community Association is broadly used to refer to any type of HOA. According to the Community Associations Institute, a trade body that represents state HOAs, the United States had nearly 350,000 community associations representing about 70 million citizens. Often, HOAs wield substantial legal authority over the homeowners in their jurisdiction. An elected board of directors typically governs these associations via an accepted set of regulations documented in the Declaration of Covenants, Conditions and Restrictions (CC&Rs). The CC&R document indoctrinates the board to place restrictions on homeowners with respect to customizing their properties, and authorizes it to impose penalties on non-compliant property owners.
Expenses associated with an HOA
Homeowners associations also collect maintenance fees on monthly or annual basis as payment for upkeep of communal areas such as pools and playgrounds. Additionally, maintenance fees also forms a major part of the HOAs reserve fund, which is utilized for renovation work or during crises. All responsibilities pertaining to collection of fees and utilizations of funds lie on the shoulders of the associations governing body. During emergencies such as natural calamities or unforeseen damages, the HOA is authorized to collect funds on an ad hoc basis to carry on repair work of communal areas. The association can also impose penalties and consecutively, liens on defaulting homeowners.
Benefits of an HOA
The HOA is not only responsible for formulating guidelines for its community of members, but is also answerable for developing and maintaining amenities such as parks and recreational facilities, swimming pools and sports facilities within its dominion. The association strives to maintain uniformity in appearance of homes and other structures within the property. The HOA collects a fee from its members for essential services like garbage collection and disposal, and snow removal, which it provides to its residents.
Disadvantages of an HOA
Registering as a member with a Homeowners Association brings with it fiscal liabilities such as high membership fees and recurring maintenance costs of the property. Additionally, HOAs usually enforce set rules regarding changing appearances of properties, which comes across as a deterrent to some homeowners. Also since most decisions pertaining to ascertaining fee amounts, collecting fees and installing upgrades are taken based on consensus, it may lead to conflicts among the members of the association.
References for Homeowners Association
Academic Research on Homeowner's Association (HOA)
All together now? An empirical study of the voting behaviors ofhomeowner associationmembers in St. Louis County, Groves, J. R. (2006). Review of Policy Research,23(6), 1199-1218. Using a detailed population database constructed for Saint Louis County, Missouri, and results from the November 2004 general election, this article analyzes the effect that living in an Homeowners association (HOA) has on voter participation and on the results of several election issues. Following a similar study by the Public Policy Institute of California, the results show that, once population characteristics are controlled for, there is no HOA effect on the likelihood of HOA members to vote Republican. Impact ofHomeowner Association(HOA) landscaping guidelines on residential water use, Wentz, E. A., Rode, S., Li, X., Tellman, E. M., & Turner, B. L. (2016). Water Resources Research,52(5), 3373-3386. This research assesses quantitatively the role that Covenants, Conditions, and Restrictions (CCRs) applied to landscaping by Homeowners associations (HOAs) play on water consumption. Statistical comparisons and models of n=1973 parcels in Goodyear, Arizona, USA, reveal that: HOA yards have less vegetation cover and those households use less peakseason water (July) than those households in nonHOA neighborhoods. Results of the study suggest that HOA landscaping regulations have the potential to reduce peakseason water use by up to 24% if CCRs were to set maximum vegetation regulations rather than minimum and if compliance were enforced. Homeowner AssociationProblems and Solutions, Hannaman, E. R. (2007). Rutgers JL & Pub. Pol'y,5, 699. When the Developer Controls theHomeowner AssociationBoard: The Benevolent Dictator, Sandgrund, R. M., & Smith, J. F. (2002). Colo. Law.,31, 91. Homeowner associationprivate governments in the American political system, McKenzie, E. (1996). Cutting Municipal Services During Fiscal Crisis: Lessons from the Denial of Services to Condominium andHomeowner AssociationOwners, Korngold, G. (2012). NYUJ Legis. & Pub. Pol'y,15, 109. This article analyzes the denial of municipal services to condominium and HOA owners from a public policy and legal perspective. The article suggests that various goals and commonly held values demonstrate that it is poor public policy for municipalities to place the pain of service cutbacks on only one segment of residential property taxpayers. Board to run: expert counsel to conquer common pitfalls inhomeowner associationmeetings, De La Torre, H. (2005). Journal of Property Management,70(3), 37-40. Homeowner AssociationCollaboration in Rosemount, Lundborg, J. (2015). The goal of this project is to identify opportunities for City collaboration and partnership with HOAs to provide public benefit and improved services. In collaboration with city project lead Christine Watson, Public Works Coordinator for the City of Rosemount, a student in LAW 7750: Community Practice and Policy Development analyzed HOA foundation agreements between the City and developers and interviewed HOA members and leadership to identify barriers to communication and provide recommendations for future collaboration. The final report from the project is provided in this paper. Home, sweet home: a sampling of the latest trends facinghomeowner associationmanagers, Wilson, A. D. (2005). Journal of Property Management,70(3), 32-37. DraftingHomeowner AssociationDocuments That Work, Winston, R. D., & Sigel, G. O. (2002). Prob. & Prop.,16, 49. Homeowner AssociationStanding in California: A Proposal to Expand the Role of the Unit Owner, Powers, M. T. (1986).Santa Clara L. Rev.,26, 619. Homeowner AssociationForeclosures and Property Values in Harris County, 19852001, Adolph, C. (2002). This paper states that homeowner associations (HOAs) in Harris County, Texas have filed thousands of lawsuits threatening foreclosure against residents who owed dues, late fees, or fines, in recent years. The paper also suggests that homeowners in the bottom quartile of home value face more than ten times the risk of HOA foreclosure proceedings as those in the top quartile. It further shows that although HOA foreclosures are ostensibly motivated by efforts to improve property values, neither foreclosure activity nor HOAs appear linked with above average home price growth.