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Learn about what the core aspects of HOAs

What is an HOA

An HOA governs planned development lots. They are often concentrated in the suburbs, where a plot of land is divided up into lots. A single association is responsible for all of these lots and their occupants. An estimated 62 million residents across the United States are represented by HOAs to ensure their safety and comfort within their neighborhoods. 

What are HOAs?

HOAs are usually formed by a real estate developer to help in the management of sold lots in a property development area. The property developers decide how the available land will be developed or divided into lots. These lots are sold to individuals, either with pre-built houses or just as plots of land on which the family or individuals can build their own home. As the real estate developers sell their lots, they create members of the HOA. All HOAs are non-profit organizations and are responsible for the maintenance of the development area.

There are two main duties which HOAs are tasked with - the care of common areas and ensuring that all repairs, extensions, and new builds are made in a way that is in keeping with the standards, safety, and style of the development area. These tasks are typically the responsibility of the board of directors.

Homeownership responsibilities

Once enough lots are sold, and there are enough homeowners, running of the association is transferred from the property developers to a board of directors elected by the homeowners. Membership of the HOA is usually tied to the house and is therefore mandatory. Members are obliged to abide by the rules established in the bylaws and are made aware of this when they purchase the house or lot.

Bylaws are established by HOA and founding property developers to ensure that the development area will be well managed and able to support the repairs etc. that it will inevitably need. Bylaws are usually based on state legislation, which varies between states. Legal oversight is different between states, but most states have clear laws and regulations defining the role of an HOA.

Members pay monthly or annual fees for membership of the association - these fees are then collected and put towards the management of common areas such as sidewalks, communal pools or play areas. To ensure that the HOA is being run well, however, the board of directors are required to be elected by the members of the association. Election rules and are often based on the Uniform Common Interest Owners Act - by the Uniform Law Commission. While this act has not been adopted by all US state, it provides common guidelines for board elections and bylaws. 

HOA Governance - the Board of Directors

The need for a board arises because of the common areas, which have to be managed by the HOA. In comparison to most condo associations, HOA members do not share ownership of the common areas - ownership is retained and managed by the board of directors. If for example, a homeowner breaks a communal fence, it is the board's task to pay for the damage and then seek compensation from the offending party. The board is primarily responsible for ensuring that all members abide by the bylaws of the Association.