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What You Need to Know about Home Owners Associations

Category: Active adult communities

October 16, 2012 — Few topics can generate strong opinions like Home Owner Associations (HOAs). There are people who have a visceral reaction to them, while others see them as a necessary and beneficial part of living together in a community. In today’s update to our original 2009 article, Joe West, one of the most knowledgeable people in the country on HOAs and CEO of Community Associations Network, shares his expertise on the basics everyone should know before they commit to living in any community governed by an HOA. Of particular interest is Joe’s shares latest assessment of how the recent real estate crisis has affected community associations, and how that affects your decision to buy into a community.

The article is the 2nd of a 3 part series of articles on homeowners associations. The first article, “Meet the New Boss, Your HOA”, talked about many of the problems to be of aware of concerning Home Owners Associations. Part 3 focused on “What You Need to Know When the HOA Takes Over from the Developer“.

TR: What’s the first thing we should know about Home Owners Associations?

Joe: The first thing that you need to know is what the association is responsible for and what you, the owner are responsible for. Sometimes the terminology can be confusing. In a condominium association, generally the association takes care of everything from the perimeter walls out, including roofs, siding, roads, lawns, etc. In a Homeowner or Property Owner association, the association generally takes care of the common areas, which may include roads, gates, amenities and so on. They usually don’t take care of the home or structure, itself. However, this will vary from association to association and from state to state. In some states, the media and owners often refer to both types as “HOA’S”, even though it may actually be in a condo. This is why it’s so important to read and understand the documents, sometimes called “CC&R’s” (Covenants, Conditions & Restrictions) or Master Deeds & Bylaws. The generic term “Community Association” covers all of the forms of associations where membership in the association is mandatory. Unfortunately, laws governing the nation’s estimated 270,000 residential and commercial HOAs are confusing and sometimes non-existent. States like California and Florida have extensive laws governing them, but many other states have just a condominium law or a poorly written, often amended HOA law. As we shall see, the absence of clear legal guidance can be a problem.

TR: Joe, what is your number 1 piece of advice for anyone buying into a development with an HOA?
Joe: That one’s easy – Don’t fall in love with the house before you check out the association. You have to be comfortable with a few important things: the rules that you will have to follow, the people governing the organization, and its finances.

TR: Could you give us an example of why that’s important?
Joe: Sure. Especially today, because of the economy, there are some community associations where a significant percentage of the owners are not paying association dues. What that means is that at least in the short term, the remaining residents will have to make up for that by paying higher fees and special assessments. The people who live in condos generally understand that the building has to be maintained and that there will be expenses required to keep it running. But in HOAs, particularly those with predominately single family homes, the new residents don’t realize the scope of the infrastructure that has to be maintained – roads, landscaping, recreational facilities, etc. That requires money, but the benefits aren’t always visible. Similarly new residents are usually not prepared for the amount of HOA control they are now under. After years of living in the suburbs where their home is their castle, many become upset when they realize that exterior colors, fences, decorations, and improvements will be tightly controlled in their new community. One of the key areas that is often overlooked when someone is moving into the association is, how does the board govern? The basic rule of associations’ is that good boards make good associations – bad boards make problems. Make sure you read the minutes of board meetings before you move in (at least a year back) and once you live there, pay attention to what’s going on and who you elect.

TR: To be better prepared, what steps should a new buyer take before entering into a contract to buy a home with a Home Owners Association?
Joe: The first step is to gather the information to help you assess the HOA. Unfortunately that’s not always easy. In many states, the HOA is often prohibited from providing a new buyer with information directly. So anything you get will have to come from the seller. You should ask for the HOA master deed and by-laws (governing documents), recent minutes, and financial statements at a minimum. While some states, like Virginia, have strong disclosure rules protecting buyers, many other states have no rules at all, even though disclosure is in everyone’s best interest.

Secondly, you either have to read and understand these documents yourself, or hire a lawyer, financial planner, or accountant to review them for you.

Third, if the seller unreasonably delays getting you the documents, or won’t provide the information you asked for, be prepared to walk away. There is probably a reason why they won’t, a reason you want to stay away from. At a minimum you can get some of this information by going to the local office where deeds are recorded and ask to see the restrictions and covenants that are attached to the property. Unfortunately, the minutes and financials (last audited financial statement, current year-to-date financial statement and current budget) will probably have to come from the seller.

TR: What are the types of issues that cause the most problems in HOAs and condo associations?
Joe: First, let me say that the vast majority of these associations are well-run. They take care of problems and they maintain their properties. The problems we see among community associations usually come when they are not proactive, instead reacting only after an issue has arisen. There are many problems that can occur in a community, because you are dealing with people and their “castles”, but most of them can be avoided with planning and oversight. More problems are coming up all the time, and associations need to be ready for them. Since the advent of the Internet, a issue in Florida can and will become an issue in New Hampshire at lightning speed. A recent case in Chicago, where a Jewish couple’s mezuzah was prohibited on the exterior condo doorframe (a common area), is a good example. That case led to a discrimination suit because Christmas wreaths were allowed on doors. Thanks to the Internet, it quickly became an issue for communities across the country. Pro-active solution: What can or can’t be placed on a common area needs to be thought out in advance and take into consideration our multi-cultural, multi-religious society.

Another big problem is not being pro-active financially, which means planning ahead and establishing reserve funds. Condo associations generally understand the need to plan for and adequately fund reserves, but often HOA’s ignore or underfund them. If the board never gets around to setting up a reserve for their maintenance or replacement, a big assessment will come out of the blue some day and cause much heartache.

Lastly, lack of transparency is a frequent HOA board problem. Meeting minutes should be quickly and prominently posted. Members of the community have a right to know what is going on and have the ability to provide some type of input. Associations should have newsletters and a web site to provide solid information on a timely and continuing basis.

TR: Joe, many community associations have been through a gut-wrenching few years with so many foreclosures, short sales, and residents not paying their dues and fees. How have associations weathered this storm, and are there are any new lessons that prospective home owners in a HOA/Community Association property should keep in mind?

Joe: Associations are a microcosm of society, and so, have weathered the economic storm the same way society did. Most survived and some hit real hard times. Those that survived did so in a variety of ways, and here, a potential buyer has to be extra cautious. Some associations got through by severely cutting maintenance, management, insurance and other expenses. Some stopped funding, or even dipped into capital repair and replacement reserves. Eventually, they are going to have to pay the piper, with significantly increased assessments, so you will want to take a good look at how they managed their finances over the past four years. If you’re not sure, find someone who understands the ins and outs of association finances and have them go through the reports.

The associations that really got hurt were those just starting new sales when the recession hit. The first few buyers have found themselves stranded and looking at trying to maintain a built-out (or partial) infrastructure, with the developer bankrupt and gone, and no one able or willing to help with the costs that were supposed to be spread among many more owners. This was really tough for those in mid- and high-rises, where the common area costs are generally much higher. Some found themselves without elevators, electricity, security and many of the other things they expected to enjoy when they moved in. Avoid these until you’ve confirmed that a successor-developer has taken over and committed to finishing out the project.

The rules about what to look out for when buying in a community association are the same, but the importance of really examining and understanding them has to be emphasized even more. Don’t buy where you can’t get all of the information, and make sure you know exactly where the association stands financially.”

TR: Thanks Joe, we appreciate your advice.

For Further Reference:
CommunityAssociationsNetwork is the largest free website for information for condo and HOAs. This site thousands of helpful links, newsfeeds that link to breaking news affecting HOAs from 30-40 legal blogs, and a very helpful newsletter.

Part 1: Meet the New Boss, Your HOA
Part 3: What Happens When the Developer Leaves and the HOA Takes Over

Comments? What do you think are the big issues affecting life in a development with an HOA? Have you had actual experience with an HOA, either in helping to run one or as resident governed by an HOA? Share your opinions in the Comments section below.

Posted by Admin on October 15th, 2012


  1. Never owned in an HOA environment and will be house hunting in 2013 so the information was very informative/good for me.

    by John Kabanek — October 17, 2012

  2. We just sold our townhome, we were there 6 years. There were various irratations that made us sell. It was too large a HOA, over 800 units.
    The developer was required by the former land owner to build a number of Habitat homes. Good idea, but the Habitat owners did not understand the HOA concept. They wanted to withdraw, because of expense of fees.
    When the Hoa took over from the developer no one thought to include a clause limiting the number of rental units. When the market fell, we had an over abundance of rentals. We also had a number of owners who just walked away. Needless to say there were always units with frozen pipes. Because of where we live, Mn, the developer, from Texas, charged extra to insulate the garage doors. We had neighbors whose doors froze shut on a regular basis all winter. The annual meetings were always problematic. It took an average of three annual meetings to have enough members in attendance for any kind of voting. More than once the board went door to door to get proxy votes for a meeting.
    The association we were in previously had a different set of problems. The “walk about” committe came around weekly with their clipboard looking for ways to fine home owners for infractions not written in the by-laws. My husband drove a van for work that did not fit in the garage. We got fined for it being in the driveway on weekends.
    I could add a few more, but this is just a sample of life in a HOA.

    by Vikki L.A. — October 17, 2012

  3. We bought in to a closed in (but ungated) nice older development ten years ago and it had a HOA, but not active. Today it is obvious that some property owners are not taking appropriate upkeep and care of their homes and land, but there’s no active HOA leadership to discuss this problem. When the builder/developer handed over the property rights and HOA to the intial board of directors didn’t that create a legal agency to provide oversight responsibility to the property owners, by law?

    by Winston — October 17, 2012

  4. I disagreed to many of these ideas and some are very good advices. HERE is what i take on HOA. They are a communist. You can’t do anything to your own home unless they knew about it; handling out citations like candies. if you can’t pay the fined they would line you up in the front of the fired squad. it’s ridiculed and a nightmare for most home owner. The cost is soaring up to the sky for HOA while home owner barely survive with their mortgage and some of them can’t even have a job, and now they have to worry about HOA too. They have too much of a power and people need to do something about that.

    by jason — October 17, 2012

  5. Joe West’s advice is excellent. We lived in a small community association in which everything from “the walls” out were taken care of by the association.The community was “self-managed” and so no outside management company to pay. There was a board of 7 members who were all residents with varied professional backgrounds and the community was very well run. As required by law, the meetings were advertized 10 days in advance for all residents to attend and gave the agenda. Normally no one came to those, but most did attend the annual budget meeting.
    Joe’s advice on reading a year’s worth of minutes will prove very valuable. And once you belong to an HOA you need to attend every monthly meeting you can.
    When we sold, we had to present a certificate of sale which told the buyers of any projects on the agenda or any assessments in the near future.
    We weren’t lucky we lived in a great community association-we did our homework. We looked at their finances and read the minutes from previous months. We were pleased with what they had in reserve for such a small,30-condo community. We paid high HOA fees and had approximately $1,000 assessment each year, which was discussed and voted on with all the residents at the annual meeting so there were no surprises. And were given 4 months to pay.
    There were issues that came up, but you have to be somewhat involved in your community.

    by Jemma — October 18, 2012

  6. Wow!..Those are some horrific stories! So glad I live in an HOA-free, toy-friendly community in Ocklawaha, Florida!

    by Neil S. Schuster — October 18, 2012

  7. Well you may not enjoy your HOA, sorry you feel that way. I have had homes were I have had great neighbors, and also a home where the guy next door who desides not to take care of his home, parks cars, trucks, planes and trains in there front yard,won’t paint or mow or water there yard,(I can go on about many more things) while your “nice home and retirement investment” your home goes from good to bad because of your neighbors. Again I’m sorry I go for a HOA where problems like this are not allowed to reck your home value and quality of life! I’m sure there are good and bad HOA’S I’m sure that good HOA’S out weighs bad HOA’S. Brad

    by Brad — October 18, 2012

  8. I agree more with Brad than Neil. One person’s beautiful, melodious, proud toy is another persons loud, ugly, annoying piece of junk. The idea that “I can do whatever I darn well choose on MY property” is fine … as long as you live ALONE on a deserted South Pacific island.

    by Mad Monk — October 19, 2012

  9. I don’t like HOAs, associations etc. They believe that you give up your rights when you buy. They also believe they are above the law. They perform illegal actions and raise condo fees to cover their expenses. They play junior high games of favorites and allow different rules for different owners.

    by Frances M. Doyle — October 24, 2012

  10. Non-HOA communities that are created on a foundation of like-minded individuals, delivers a community that is welcoming, vibrant, enthusiastic, and most of all RESPECTFUL. And they’re cost-effective!

    Here are a few big whys HOAs can be costly:
    1) They have the right to increase their fees by at least 3% every year to meet average cost of living increases.
    2) HOA fees don’t cover amenity fees! That’s an add on…
    3) Some have bond fee!..nearly $30k above the purchase of a home.
    4) A really big $$$ one — that I just heard from a friend of mine who lives in the The Villages. She’s being hit with an assessment of $300 per home because the two ponds for the golf course (that she & her husband don’t use), needs a $600k repair. Let’s just say, she gave me an earful and wishes she lived elsewhere.

    The non-HOA community I know is friendly-neighborly-respectful, and residents have savings for travel and more! Non-HOA communities are the next thing in active adult retirement! It’s the future, Baby!

    by Neil S. Schuster — October 25, 2012

  11. Re the woman in The Villages who is complaining about the assessment for the golf course ponds: If she and her husband don’t play golf, why did they buy into a community with golf courses? Golf courses are expensive to maintain.

    One of our association’s retaining walls collapsed a while back due to excessive rain. Turns out movement of earth isn’t covered by insurance. Who knew? So we were all obliged to contribute to the repair of the wall. I derive no direct benefit from this wall, but it was part of the community when I built here. On the other hand, I do derive a benefit from having a pond lot (which cost extra), but all homeowners contribute to the upkeep thereof. Again, it is part of the community.

    I guess the moral of this story is that if you hate HOAs, don’t buy in a community governed by one.

    Neil, can you share more information about this non-HOA community you are so big on?

    by Linda — October 25, 2012

  12. All HOA’s have good and bad points…my god-mother had a great home in Fort Lauderdale without a HOA…all things went well until the neighbor died and left her house to her daughter…what a nightmare…for all of a sudden Billy-Bob and her redneck children moved in…cars on the grass…parties all weekend…drag racing in the street…and then came the Harley’s with the loud side pipes late at night and early AM when the parties ended…A HOA would have been able to correct it…

    by Russ — October 25, 2012

  13. Regarding HOA’s. If the fee is reasonable, and the area is one where you want to live, HOA’s are worth it. It does not matter where you live, there will always be some kind of problem to deal with. We lived in a beautiful condo in Fort Collins, Colorado with a very reasonable HOA fee and loved it. (some neighbors had retired there from Calif., Hawaii, and Washington!) The condos were all well cared for,the neighbors CARED about how the area looked and all were compliant except one young man who soon moved from the area. The grass was mowed, bushes were trimmed, the snow (very small amounts in Fort Collins) was cleared from driveways and sidewalks, garbage and recycling costs were inlcuded in the HOA fee and when an outdoor light bulb burned out, it was immediately replaced! Not having to do all the outside work, which we have done for many, many years was wonderful, gave us time to enjoy life!:smile:

    by Rory — October 26, 2012

  14. Neil – OK, suppose one if your “Respectful” neighbors sold his house to a person/family less heedful of your sleep paterns or color choices (etc). How would you go about changing the situation? Let’s already assume that rational “discussions” did not work and you do not believe in mistreatment of animals. Are zoning ordinances strong enough within your area to handle such possibilities? Is zoning your recommended solution? THat would seem to merely be HOA in another “color.” It seems that your development is full of like-minded people who like their “toys.” No problem with that. However, what about someone who moves in with a “toy” that is new and less desirable?

    by Mad Monk — October 26, 2012

  15. Hi everyone. The article was well written and a good one. During my 30 years in the condo & HOA industry I have seen it all. I have audited HOAs and managed HOAs I’ve also provided Board of Directors training. Recently I decided to switch sides and work on behalf of the homeowners/homebuyers I have found many that bought into a Condo or HOA and hated it. That’s why it’s so important to do your Due Diligence before you buy your home. For a free checklist & other info, visit

    by Gail Pizetoski — December 22, 2012

  16. Is there a place to compare various community HOA fees and amenities?

    by Eden — September 20, 2014

  17. […] further reading: Home Owners Associations: Friend or Foe? Part 1: Meet the New Boss, Your HOA Part 2: What You Need to Know About Homeowners Associations? Part 3: What Happens When the Developer Leaves and the HOA Takes […]

    by » 10 Things Your Active Adult Community Won’t Tell You - Topretirements — March 11, 2015

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