According to the Foundation of Community Association Research, approximately 24 percent of all U.S. residents belong to a community association. Their research also reveals that this number is continually on the rise.
If you are in the market for a condominium, the chances are high that you will also be a part of this growing trend. Here is everything you need to know about condo HOAs:
Why Condo HOAs Exist
By definition, a homeowners association is a legal entity that governs a community of homes, including subdivisions, condominiums, townhomes, or planned community. HOAs operate within state statutes to enforce regulations and collect assessments from homeowners, while also taking care of maintenance repairs and upkeep of common areas.
Homeowners Associations have been around since the mid-nineteenth century. In fact, 1844 marks the year that the first HOA was founded in Boston, Massachusetts. However, HOAs did not pick up much traction until the 1960s. This was a period of rapid national growth for the United States, and suburban development specifically was booming.
Since this time of growth, HOAs have been on a constant rise in America. More home buyers are finding themselves drawn to the exclusivity of HOAs as well as the supplemental services and amenities they provide.
How HOAs are Created
When new communities are developed, often new HOAs also come into creation. While the process for establishing an HOA may look different depending on the location, there are standard procedures.
Upon the creation of a new community, the developer establishes a business structure by forming an LLC or nonprofit corporation. The shares of the HOA are allocated as the developer sells units.
Once formed, the HOA is responsible for creating covenants, conditions, and restrictions (CC&Rs) that describe how the HOA will operate and what rules homeowners must abide by. During this process, a procedure for future modification of the CC&Rs is implemented and rules and regulations are written, putting the CC&Rs into easy-to-understand language for community residents.
The next step involves drawing up governing documents, such as articles of incorporation and bylaws (which outline meeting frequency, voting guidelines, the election of HOA leaders, and other operating procedures).
Finally, the HOA must elect qualifying officers and board members. This board takes on the responsibility of managing all aspects of the community’s homeowners association.
What Their Main Mission Is
Ultimately condo HOAs are in place to help maintain the quality of life for community residents and protect their property value.
Through the funding provided by the owner’s monthly assessments, HOAs takes a significant burden off residents by keeping up with community maintenance.
Not only does this maintenance help alleviate resident’s stress and responsibilities, but it also helps ensure community curb appeal. HOA help keep the neighborhood in pristine condition, promoting a desirable location for potential buyers and an enhanced environment for residents.
While HOA takes care of a lot of maintenance, owners are still held accountable for keeping the community in good shape through rules and fees. The rules restrict residents from trashing the outside of their units, and the fees provide funding for external maintenance.