If you live in Phoenix you probably know that HOA stands for Home Owner’s Association, but what is a Home Owner’s Association? What does it mean to live in a community with an HOA? And why might you want to live in one?
First thing’s first, a clear cut definition: the HOA has power and authority to impose the rules set forth by the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), and the CC&Rs define the scope at which the HOA can act within the regulation of the Federal law and the individual State Laws.
In short the Home Owner’s Associations act as an a governing body that oversees the enforcement of the CC&Rs.
The Who: Board of Directors
The board of directors are members of the community that are either appointed or elected by the others in the community. You can think of them as being similar to the Board of Directors for a company, or like a mini-government underneath acting below the local government. They are typically made up of a President, Vice-President, Treasurer, Secretary, and the Board Members.
The President and Vice President both serve leadership roles and have an in depth knowledge of the CC&Rs. They are in charge of running the HOA meetings, appointing committees to address issues brought forth by the community, and deciding when other members of the HOA are allowed to speak to the meeting.
The Treasurer oversees the financials, securities, and funds available to the associations. Typically they will be in charge of billing, collections, how to spend the money, and are tasked with the job of creating the annual budget for the community. At meetings they will give an updated report of where the community’s finances are and their projections for the rest of the year.
The Secretary is the person that members look to when they need to fact check what happened at the last meeting. They are in charge of taking the notes for the meetings, securely storing the notes, and having the notes available to members should they need them.
The What: Home Owners Association
A HOA is an organization that enforces the CC&Rs, collects dues, and creates a budget for the community. The structure of the organization is laid out in the articles of incorporation and the bylaws created by the organization. The Home Owner’s Association is usually comprised of the members of the community, but in some planned development communities the builder will have control over the association until a certain number of lots are sold.
If you are thinking about buying a home located in a HOA you will have to take into consideration that you will be paying HOA dues along with your regular mortgage payment. The HOA membership dues are used by the association for maintenance and improvements to the common areas. Common areas are typically anything that is not part of a HOA home owner’s house, but still a part of the community. This can include: recreation centers, pool areas, parks, and walkways within the community.
Covenants, Conditions, and Restrictions
These are the rules that govern the community and put limitations on what the home owners in the community can do with their property. Just like in grade school when the teacher had written on the board that there was “No chewing gum allowed in her classroom” the Covenants, Conditions, and Restrictions (CC&Rs) can do the same for home owners. But instead of no gum chewing it can be “No business vehicles can be parked on the street” or “Your rocks can only be this color of brown” or “No wooden fences”. However, if you violate these rules you won’t be sent to detention and instead you might find yourself facing fines or a lawsuit depending the severity.
Checks and Balances
Although there is no regulatory body that oversees HOAs there are multiple federal and state statues that affect them. I’ll break down how these two levels of government see the HOA.
The federal laws concerning HOAs are focused on their organization and their financials. That means they need to be organized for the purpose of managing the property and that the money collected is going towards that goal.
There are many state laws affecting HOAs in arizona. The main one that regulates them is the Planned Communities statues of 1994 which address the formation and operation of master planned community HOAs. “these statutes address assessment increases, penalties, open meetings, disclosure of association records, resale disclosure, penalty and assessment liens, foreclosures, flag and political sign display, vehicle parking, solar energy restrictions, rental property requirements, architectural and design review committees and certain affairs of the boards of directors.” (Arizona State Senate Issue Brief)
The Why: Property Values
The main reason to own a home located in a HOA is protecting your property’s value. All of the rules, restrictions, and enforcement can sound overbearing for a community that want you live in, but as a home owner these rules can help maintain your home’s value. They can ensure that the neighborhood that you fell in love with will stay the same or improve!
That is where the association dues come into play as they are used to improve the community. This can be either through the maintenance of the common areas or improvements to the common areas. A good example of the common area maintenance is landscaping of parks and walkways. Say your community wanted to add a new jungle gym for the kids at the community park with the HOA you can make it happen. New water slide at the community pool? HOA can make that happen. Cut down that overgrown tree that’s hanging on your favorite walking path? HOA can make them go away.
But what if that tree was hanging into your yard from your neighbors yard? Or what if your neighbors were storing their 40 foot motor home on the street in front of your home and you were worried you’d never see your front door again? The HOA can enforce the rules set forth in the CC&Rs so that you won’t have that tree hanging in your yard and you’ll see your front door again. Being in an HOA can give you the peace of mind that even if you get new neighbors the homes around you will still abide by the same rules. And this security can also be a benefit when trying to sell your home further down the line.
HOAs are organizations created and developed from the CC&Rs that were made when the planned community was founded. This association is run by a board of directors comprised of members of the community. When you purchase a home in an HOA you are subject to the CC&Rs that apply to the property. Being in a HOA means that you have to pay HOA dues to the association. A HOA provides a number of benefits to the home owner such as common area maintenance, community improvements, and making sure the CC&Rs are followed.