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What You Need to Know About HOAs | The Allstate Blog

Joining an HOA? Here’s What You Need to Know

When you purchase a condo, townhouse or home, you may be required to join a homeowners association (HOA). According to the Community Association Institute, more than 21 percent of the U.S. population live in neighborhoods with these organizations. Generally, the group is responsible for maintaining the quality and value of… Allstate https://i2.wp.com/blog.allstate.com/wp-content/uploads/2018/07/row-of-houses-with-for-sale-signs-in-the-front-yards_iStock_cropped.jpg?fit=684%2C371&ssl=1
Row of houses with for sale signs in the front yards.

When you purchase a condo, townhouse or home, you may be required to join a homeowners association (HOA). According to the Community Association Institute, more than 21 percent of the U.S. population live in neighborhoods with these organizations.

Generally, the group is responsible for maintaining the quality and value of properties in a community, according to the Better Business Bureau (BBB). But for first-time homeowners, dealing with an HOA may be confusing. Here are some tips to help newcomers navigate their relationship with the organization.

Understand the Basics

Familiarize yourself with an HOA’s governing documents so you know what you can and can’t do. HOAs typically have the following, according to HGTV:

  • Covenants, Conditions and Restrictions (CC&Rs): These are the rules outlined by the HOA. CC&Rs can cover everything from the colors you can paint your house to the improvements and alterations you can make to what kind of curtains you can hang, according to Realtor.com.
  • Contracts: Homeowners are usually asked to sign a contract saying they will follow these rules when they move in. It is a legally binding document filed with the state, according to U.S. News and World Report. If you fail to follow the rules, the HOA may fine you. Unpaid fines can result in a lien on your house and may even lead to foreclosure.
  • Homeowners association bylaws: This document includes the details of how an HOA should operate, according to HGTV. It typically outlines how board members are elected, how often fees can be charged and how you can try to change rules that you disagree with, according to Realtor.com. HOA members must vote to make changes to this document, according to U.S. News and World Report.

HGTV recommends reviewing these documents before purchasing a house in an HOA community.

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Do Your Homework

Once you understand your HOA’s basics, it can be helpful to take an in-depth look at the organization’s current state of affairs. HGTV recommends reviewing the HOA meeting minutes to see what the organization is working on.

HGTV also recommends studying the HOA’s operating budgets for the past several years. The budget should cover day-to-day expenses, such as maintenance costs and staff salaries. At the same time, HGTV says that at least 3 to 5 percent of the HOA’s gross operating budget should be going into a reserve for repairs, such as paint jobs or new roofs (in the case of a multi-unit building). A low reserve could signify poor monetary management and could leave homeowners subject to increased dues or special assessments — additional fees subjected to homeowners — to help cover needed repairs.

Get Involved

To help ensure your voice is heard on community issues, attend the HOA meetings. According to Realtor.com, these meetings are usually held quarterly, although smaller communities may only meet a couple of times a year. If you are too intimidated to speak up, BBB suggests getting to know the member-elected HOA board of directors better so that you feel more comfortable.

If you decide you would like to be more involved, there may be several ways to seek out leadership roles within the HOA. Realtor.com suggests volunteering to help the HOA with a task that fits your skill set, such as accounting or website design.

You may also run for election to the HOA’s board of directors when positions become open. According to Realtor.com, boards are typically made up of three to nine community members who serve for one to two years. They are responsible for a range of tasks, including reviewing property management reports and monitoring budgets.

Follow Proper Protocol

HOAs often have defined communication channels for questions and issues. For example, according to BBB, some HOAs use property management companies for maintenance, to advise board members and to manage overall operations. Should an issue come up, you will need to contact the property management company to get it resolved.

Drive Change Smartly

If you don’t agree with an HOA rule, there are some things you can do to change it. Reviewing the bylaws may be a good starting place since they often outline the process for challenging rules.

U.S. News and World Report recommends getting neighbors to sign a petition to bring before the board. You can also put in a written request for a variance — which gives you permission to break a rule — using the appropriate form in your CC&R documents, according to Realtor.com. This document should be submitted and approved by the board and, if applicable, the property management company.

No matter what rule you’re challenging, homeowners shouldn’t stop paying their dues. The HOA can sue you, put a lien on your house or, in a worst-case scenario, even foreclose on you for nonpayment, according to Realtor.com.

By knowing the rules of your homeowner’s association and getting involved, you can help make sure your relationship with the organization is a positive one.