What You Should Know About HOAs
People have very mixed opinions regarding Homeowner Association and Condo Associations. Many people will warn you about living in a planned community with a Homeowner’s Association. If you look at an HOA as an asset instead of a detriment, you’ll see the value of being a part of something within your own neighborhood. Before you join an HOA you should do research as to the type of HOA that exists.
A developer or a builder can set up a legal entity known as a homeowner’s association. This allows the developer to transfer ownership of the community upon completion to the homeowners of individual lots to do what is best for the community at large.
RICK STOCK LAW represents both Homeowner’s Associations as well as owners who belong to homeowner’s associations. Below are some items that are useful to review when deciding to join a homeowner’s association.
Research Research Research!
The ultimate purpose of an HOA is maintain and manage the common area and shared amenities in the community as well as enforce the rules and regulations of the community sometimes called the covenants, conditions and restrictions (CC&Rs), which all homeowners in the development must follow. When moving into an HOA, consider the following:
- The DECLARATIONS: This document dictates the premise of how and for what purpose the community was built. These are the first documents belonging to a new community and are much harder to change compared to bylaws or rules and regulations. They are often drafted for and by the developer of the community. Generally bylaws can be changed by a majority vote of the entire community.
- BYLAWS: These dictate in fine detail how the association should operate from an operations standpoint. Generally, bylaws can be changed by the sitting board members.
- HOA budget and financial statements. This shows the profit and loss of the community and the strength of the board as well as the management company. If the community has a positive budget, that is a signal the board is doing a good job. A negative balance assumes the board is struggling.
- HOA meeting minutes. The minutes show you what is currently up for discussion in the community. Generally this is where you find out about changes to the rules AFTER the initial drafting of declarations and bylaws.
- CC&Rs. These rules typically limit architecture, but could in reality limit just about anything from house colors to animals, to where you park your car.
Welcome to the Club!
Buying a home in a HOA makes you automatically a member until you sell your property. You’ll be expected to pay your dues. A portion of your dues are to maintain common areas while the rest goes to the common reserve account for potential repairs. Dues range anywhere from about $100 per home to $1,000 a month per home depending on what sort of amenities are available. Some communities have great amenities such as swimming pools, fitness centers, or tennis and basketball courts. Potential savings in home-related expenses holds another advantage over single-family homes.
Assessments, oh My
Just because your dues start at $100 a month doesn’t mean they won’t ever go up. The board has the power to increase your assessments for various reasons. If the community decides to put in a playground or undertake any other project, the increase in assessment is known as a special assessment. This means that in addition to the regular number of monthly dues, additional money will be collected from each homeowner evenly. If the lawn mowing of the community goes up in cost, that will increase your assessment. The best way to combat assessment increases is to get involved in your community.
Rules are meant to help the community thrive and for property values to grow, but some people feel that HOA and Condo rules are too restrictive. You should always have legal counsel review the rules and explain the highlights of them to you before you sign them. Blindly signing rules is one of the top reasons that people are sued by their HOA. There isn’t a problem having rules in the community as long as people are aware of the rules before they jump into their new home purchase.
The more involved you are in your community, the more enjoyable the HOA experience can be. The biggest mistake that homeowners in HOAs make is they fail to attend meetings. They neglect to vote on the board members. They fail to be involved. HOAs work the same way most small governments work. Everyone gets a chance to be heard. If you waive that chance because you aren’t involved, you are basically saying that you don’t care what happens within your community. If you don’t like your current board, run for a board spot. If you don’t have time to be on the board, participate in a committee. If you can’t do that, go to meetings. The more involved you are and the more often your opinion is heard, the more likely you’ll be able to shape your community.
If you are searching for a Pennsylvania Homeowner Association (HOA) or Pennsylvania Condo Association attorney, sign up below for an initial consultation with Charles Rick, Esquire. For more than 10 years he has represented both homeowners and community associations. Whether your issue is regarding special assessments or you are looking for advice on how to get on your board, Charles is here to help. For a free consultation, click here