Homeowner associations (HOAs) are an integral part of many residential communities and complexes, offering a range of benefits and playing a crucial role in managing and maintaining the communal aspects of a complex or estate.
But what exactly are their responsibilities to residents and property owners, and what should potential buyers take into account when they are looking at property in developments with HOA’s?
Claude McKirby, Co-Principal for Lew Geffen Sotheby’s International Realty in Cape Town’s Southern Suburbs and False Bay, explains: “A homeowner association is an organisation formed by the residents of a housing community or condominium complex to manage and govern shared amenities and common areas.
“HOAs are typically governed by a board of elected homeowners who make decisions on behalf of the community and they are responsible for a number of critical functions.”
What are the main functions of a homeowners association?
- Maintenance and Repairs: One of the primary functions of an HOA is to maintain and repair common areas and shared amenities. This includes landscaping, pool maintenance, parking lots, recreational facilities, and more. By pooling resources through association dues, HOAs can ensure that these areas are well-kept and enjoyable for all residents.
- Enforcing Rules and Regulations: HOAs establish and enforce community rules and regulations, often outlined in a set of covenants, conditions, and restrictions. These rules may cover topics such as architectural guidelines, noise restrictions, pet policies, and parking regulations and enforcing these rules helps maintain the overall aesthetic and quality of life within the community.
- Financial Management: HOAs collect dues from homeowners to cover the costs of maintenance, repairs, and other community expenses. The HOA board is responsible for budgeting and financial management to ensure that funds are allocated appropriately and transparently.
- Dispute Resolution: When conflicts arise between neighbours or between homeowners and the association, the HOA may step in to mediate and find a resolution. This could involve addressing issues related to noise complaints, property boundaries, or common area usage.
What should you expect of your homeowners association?
- Regular Communication: HOAs should maintain open and transparent communication with homeowners. This includes sharing information about upcoming community events, updates on maintenance projects, and changes to rules or policies. Homeowners should expect regular newsletters or updates via email or community notice boards.
- Fair and Consistent Enforcement: HOAs should apply rules and regulations fairly and consistently to all homeowners. This means that enforcement should not be arbitrary or discriminatory. When there is a violation, homeowners should receive a written notice and an opportunity to rectify the issue before facing penalties.
- Opportunities for Homeowner Input: Homeowners should have opportunities to provide input and feedback to the HOA board. Regular meetings, town halls, or surveys can be effective ways to gather homeowners' opinions and preferences regarding community matters.
- Transparent Financials: HOAs should maintain transparent financial records and provide homeowners with access to budget reports, expense breakdowns, and financial statements. Homeowners have the right to know how their association dues are being utilized.
- Reasonable Dues and Budgeting: Homeowners should expect the HOA board to create a reasonable budget that adequately covers necessary expenses without burdening residents with excessive dues. The budgeting process should involve input from homeowners and be presented for approval before implementation.
- Adherence to Local Laws and Regulations: HOAs should comply with all relevant governmental regulations and local bylaws governing homeowner associations. This includes adhering to legal requirements for elections, financial disclosures, and rule enforcement.
Buying a Home in an HOA Community: What to Look Out For
McKirby says that when it comes to buying a home in an estate or complex, prospective buyers must look beyond the property as they will be living within a community and this will impact their lives on a day-to-day basis.
“Reviewing the HOA, how the complex/estate is managed, and determining if it’s a good fit for your lifestyle is as important as viewing the property and there are several key points that must be checked out before you decide to purchase a property.”
- Review the HOA’s Regulations and Bylaws: Prospective buyers should carefully review the community's CC&Rs and bylaws before making a purchase. These documents outline the rules and regulations that all homeowners must follow. Ensure that you can comply with these guidelines and that they align with your lifestyle preferences.
- Assess HOA Financials: Request to review the HOA's financial statements to assess the association's financial health. Look for any signs of financial instability or excessive debt. A well-managed HOA with sufficient reserves is more likely to maintain the community effectively.
- Understand HOA Levies and Assessments: Determine the amount of HOA dues and any special assessments required. Assess whether these costs fit within your budget and if they are reasonable based on the amenities and services provided.
- Assess HOA Governance: Research the effectiveness of the HOA board and its ability to address residents' concerns. An active and engaged board is more likely to address issues promptly and maintain a harmonious living environment.
Check Litigation History: Inquire about any ongoing or past legal disputes involving the HOA. Frequent litigation may be a red flag and could indicate underlying issues within the community.
“Buying a home is a significant investment and you are committing to living there for a number of years so understanding the responsibilities and benefits of HOAs is essential for a positive and harmonious living experience within a community,” concludes McKirby.