What Is A Homeowner's Association?

A homeowners' association (abbrev. HOA) is the legal entity created by a real estate developer for the purpose of developing, managing and selling a community of homes. It is given the authority to enforce the covenants, conditions, and restrictions (CC&Rs) and to manage the common amenities of the development. It allows the developer to legally exit responsibility of the community typically by transferring ownership of the association to the homeowners after selling off a predetermined number of lots. Most homeowners' associations are non-profit corporations, and are subject to state statutes that govern non-profit corporations and homeowners' associations.

The fastest growing form of housing in the United States today is common-interest developments, a category that includes planned-unit developments of single-family homes, condominiums, and cooperative apartments.[1] Since 1964, homeowners' associations have become increasingly common in the USA. The Community Associations Institute trade association estimated that HOAs governed 23 million American homes and 57 million residents in 2006.

Authority
A homeowners' association is incorporated by the developer prior to the initial sale of homes, and the Covenants, Conditions, and Restrictions (CC&Rs) are recorded when the property is subdivided. When a homeowner purchases a home governed by an HOA, the CC&Rs are included with the deed.

Powers
Like a city, associations provide services, regulate activities, levy assessments, and impose fines. Unlike a municipal government, homeowner association governance is subject to corporation law, and sometimes specific legislation governing homeowners' associations. HOAs are considered private corporations and are not subject to all of the Constitutional constraints that public government must abide by. Some of the tasks which HOAs carry out would otherwise be performed by local governments. A homeowners' association can enforce its actions through private legal action under civil law.

Assessments
Homeowner associations can compel homeowners to pay a share of common expenses, usually per-unit or based on square footage. These expenses generally arise from common property, which varies dramatically depending on the type of association. Some associations are, quite literally, towns, complete with private roads, services, utilities, amenities, community buildings, pools, and even schools. Many condominium associations consider the roofs and exteriors of the structures as the responsibility of the association. Other associations have no common property, but may charge for services or other matters. Assessments paid to homeowner associations in the United States amount to billions of dollars a year.

Benefits
An HOA provides people with shared values on the type of neighborhood they desire an opportunity to enforce regulations, consistent with overriding statutory constraints, to achieve such a community. In doing this they inherently restrict the freedoms that would otherwise exist for its members based on municipal codes. For instance a degree of conformity is required in exterior appearance of single family homes and there are often limits to noisy activities. There are pre-existing rules in the form of CC&Rs and Bylaws that a buyer has a right to view before entering such a community, that also prescribe methods for modification of these regulations. These bylaws are largely limited in various degrees by state laws, with some overriding federal judicial or statutory limits. For instance no HOA can prohibit signs advocating political positions based on a Supreme Court decision, while they can prohibit commercial signs. In every association board members and officers are chosen by election from its property owner-members, with the ability in some states for the membership to remove board members even during their terms.

Many homeowners associations include recreational amenities, that they maintain for exclusive use of its members. This can allow an individual homeowner access to a pool, clubhouse, gym, tennis courts or walking trails that they may not be able to otherwise afford. Each member of a homeowners association pays assessments that are used to pay the expenses of the community. Some examples are landscaping for the common area, upkeep of the amenities, insurance for commonly-owned structures and areas, mailing costs for newsletters or other correspondence, employment of a management company or on-site manager, or any other item delineated in the governing documents or agreed to by the Board of Directors.