What is a HOA? Before potential buyers finalize home sales, it is important to know what an HOA is and the implications of living in an HOA-governed community. Not everyone is suited for HOA living, as there are several variables to consider.
What is a HOA? HOA Meaning Defined
An HOA is an organization that governs the operations and management of a community. Typically, planned communities have HOAs, which are formed at the start of development. Later, the developer transfers control over the HOA to the homeowners.
Community members can also start an HOA after the fact. It requires filing documents with the local county recorder’s office and the Secretary of State (for nonprofit corporations).
What Does HOA Stand For?
HOA stands for homeowners association. Many use the term “HOA” as a shorthand.
What Does HOA Mean in Real Estate?
What does HOA mean? In real estate, HOA means homeowners association. It refers to the organization that oversees a community’s maintenance, management, and operation. An HOA is also in charge of enforcing rules and regulations.
What is the Purpose of an HOA?
The primary goal of an HOA is to maintain property values by ensuring maintenance, enforcing rules, and managing residents. Property values are essential, especially to current and future homeowners.
Current homeowners want to protect their investment and ensure it grows over time. Potential homeowners are also attracted to a well-managed community, which means their future investments will remain secure.
Is an HOA a Corporation?
In many states, homeowners associations are structured and organized as nonprofit corporations. They must file Articles of Incorporation with the Secretary of State, establishing them as legal entities.
As a nonprofit corporation, an HOA can enter legal contracts, own property, and enforce rules through legal actions. Legal contracts or agreements are usually entered with management companies, maintenance companies, landscapers, and other vendors. An HOA also owns clubhouses, roads, and common areas.
Is Membership in an HOA Mandatory?
Membership in an HOA is often automatic and mandatory. This means that when a homeowner buys a property in an HOA community, they automatically become a member. They must then fulfill their obligations to the HOA and follow the association’s rules.
Of course, some HOAs offer voluntary membership. This means that homeowners can either opt in or out of the association. If they decide to join the HOA, they must fulfill their obligations and gain access to the amenities, services, and other benefits the HOA offers.
Who Runs an HOA?
A board of directors governs homeowners associations. This HOA board typically consists of officer roles, such as the president, VP, secretary, treasurer, and non-officer roles. The HOA board is made up of volunteer homeowners who are elected through votes by the membership.
What are the HOA Governing Documents?
The governing documents of an HOA serve as a how-to guide for running the association. They contain the obligations and responsibilities of both the HOA and its members and detail the HOA’s operations and requirements.
The governing documents of an HOA include:
- Recorded Plat. This is the community map indicating where everything is. It sometimes details maintenance responsibilities.
- CC&Rs. The Declaration of Covenants, Conditions, and Restrictions outlines the rights and responsibilities of homeowners and the HOA.
- Articles of Incorporation. This includes basic information about the HOA, such as its name, address, and corporate status.
- Bylaws. The bylaws outline how the HOA must be run, including details such as how often board meetings are held, board term limits, voting rights, etc.
- Rules and Regulations. These refer to the community’s rules, often expounding on the ones within the CC&Rs.
Of course, above all these documents, HOAs must follow federal, state, and local laws.
What are the Responsibilities of an HOA?
A homeowners association is responsible for managing and operating the community. Specific responsibilities will depend on the governing documents, but they usually include the following:
- Collect and manage HOA dues and assessments
- Maintain a budget and financial records
- Fund and oversee the reserve fund
- Handle special assessments when needed
- Pay for maintenance, insurance, and other expenses
- Enforce the HOA’s rules and governing documents
- Issue violation notices and fines for rule breaches
- Ensure compliance with bylaws and rules
- Mediate disputes between homeowners
- Approve or deny homeowner requests for property modifications
- Maintain and repair common areas (e.g., pools, clubhouses, landscaping)
- Oversee road maintenance and snow removal (if applicable)
- Handle trash collection and waste management
- Maintain shared amenities (e.g., gym, parks, tennis courts)
- Schedule repairs for sidewalks, lighting, and other infrastructure
- Organize board meetings and annual homeowner meetings
- Maintain meeting minutes and records
- Manage elections for HOA board members
- Review and amend governing documents as necessary
- Communicate with homeowners about community updates
- Ensure compliance with local, state, and federal laws
- Handle legal disputes and litigation
- Obtain and maintain HOA insurance policies
- File necessary tax and corporate documents
- Work with legal counsel on governance issues
- Hire and oversee property management companies (if applicable)
- Contract and supervise vendors for landscaping, security, and repairs
- Negotiate vendor agreements to ensure fair pricing and quality service
What are the Benefits of Living in an HOA?
Living in an HOA offers homeowners peace of mind and the preservation of property values. HOAs offer well-maintained common areas, access to amenities, increased safety and security, and professional management.
Additionally, if there are disputes, the HOA can also resolve them. With an HOA, residents can look forward to an aesthetically pleasing and uniform neighborhood appearance.
Do Members Have to Pay HOA Fees?
In general, homeowners must pay regular fees to their HOA. An HOA’s authority to collect fees comes from state laws and the governing documents. This authority can be found in Texas under Section 204.010 of the Texas Property Code.
When homeowners first buy into the community, they sign a contract with their HOA to follow the governing documents. This includes fulfilling a financial obligation to pay fees and assessments when due.
What are HOA Fees For?
HOA fees cover the association’s expenses, which include maintenance expenses, management fees, insurance, repair projects, security expenses, legal fees, and more.
How Much are HOA Fees?
On average, HOA fees cost $200 to $300 per month. Of course, the amount can vary depending on a few factors, including the size of the community, the extent of common areas, economic factors, and the location.
For example, a high-end community in a wealthy neighborhood will likely charge a higher monthly fee. Larger communities with extensive amenities and common areas also tend to have more expenses, resulting in higher HOA fees.
Can an HOA Charge Special Assessments?
An HOA can levy special assessments. A special assessment is an additional fee that an HOA charges when necessary. Typically, the need for a special assessment arises when there is a budget shortfall or an unexpected expense.
Like regular dues, an HOA’s authority to charge special assessments comes from state laws and the governing documents (Section 204.010 in Texas). It is worth noting that special assessments are rare, especially if the HOA board plans its budget properly.
What Happens If I Don’t Pay HOA Fees?
When homeowners fail to pay their HOA fees, there are a number of possible penalties. These penalties include late fees or interest charges, a temporary suspension of privileges, and legal action. An HOA can also send the delinquent account to a collection agency.
Most HOAs also have the power to place a lien on the home of a delinquent owner. With a lien on the home, the owner can’t refinance their mortgage or sell the property. The HOA can also foreclose on the lien later on.
Can an HOA Regulate Rentals?
Whether or not an HOA can prohibit or restrict rentals depends on state laws and the governing documents. In Texas, no law expressly regulates short-term rentals in HOA communities. Homeowners and board members should check their CC&Rs and bylaws for rental rules.
Can an HOA Regulate Pets?
Like rentals, an HOA’s authority to prohibit or restrict pets comes from state laws and the governing documents. In some states, HOAs can’t enforce a no-pets policy. HOAs generally have free rein in others, provided their governing documents allow it. In Texas, no law prevents HOAs from enforcing a pet policy.
Do I Need HOA Approval to Make Exterior Modifications?
More often than not, HOAs have architectural standards that homeowners must follow. These standards refer to what homeowners can and can’t do to the exterior of their property/home. For example, if an owner wants to change the color of their exterior walls or add a patio, they must follow the guidelines set forth by the HOA.
Before making any architectural changes, homeowners typically undergo an approval process. They submit an application along with supporting documents, which the HOA or architectural committee then reviews. Upon approval, the owner can begin construction.
Can Homeowners Attend Board Meetings?
Whether homeowners can attend board meetings depends on state laws and the governing documents. In many states, board meetings must be open to all members except those held in executive session. In Texas, Section 209.0051 requires HOA boards to have open board meetings (except in executive sessions).
Can I Request to View Financial Records?
In many states, homeowners have the right to inspect the HOA’s financial records (and other records) to promote transparency and accountability within the association.
In Texas, the right to examine the HOA’s records is found under Section 81.209, Section 82.1141, and Section 209.005. If state laws are silent, homeowners should check the HOA’s governing documents for records inspection rights.
What Laws Govern HOAs in Texas?
The laws that govern HOAs in Texas include:
- Texas Condominium Act (for condominiums created before January 1, 1994)
- Texas Uniform Condominium Act (for condominiums created after January 1, 1994)
- Texas Property Code (for HOAs)
- Texas Nonprofit Corporation Act (for nonprofit corporations)
What is an HOA? Answered!
Now that homeowners have a clearer view of an HOA, they can make more informed decisions. Before buying a home, evaluate whether or not HOA living is suitable. This can prevent headaches and disputes in the future.
Preferred Association Management Company offers exceptional HOA management services to communities in Central Texas. Call us today at 512-918-8100 or contact us online to learn more!
