What is an HOA? Full Guide + How To Best Manage One

If you manage a rental property that is part of a community, you are probably familiar with homeowners associations.

These associations are meant to enforce rules and regulations within the community and make sure everything remains in order.

But, they become much more complicated than that.

In this guide, we will be going all aspects of what a Homeowners Association (HOA) is as well as other things, like fees, rules, and more.

To begin, let's go over what is an HOA.

What Is An HOA?

A homeowners association, or an HOA, is a body of self-governing people that manage several tasks and responsibilities in a neighborhood. These HOA board members are typically volunteer homeowners who collect HOA fees and conduct inspections in the community to make sure that everything is in compliance with HOA rules.

An HOA can govern various types of properties like condos, houses, townhouses and brownstones, apartments, and many more. Just like the types of properties, the way that the HOA functions also differ from community to community. They typically have board meetings where they discuss the current state of the community and report on every HOA violation or course of action.

Every community that is governed by an HOA is subject to different sets of laws and bylaws. These laws are enforced by the members of the association and funded by fees. Depending on the community, these fees can vary greatly, but they also cover various things, discussed later.

Before going into HOA fees, however, lets go over how these HOA associations actually work.

HOA Meaning

After purchasing a property that is part of an HOA, you are automatically included in the community associations. This means that you will be required to adhere to all of the community rules and pay all of the fees.

Then, after you are officially part of the HOA, you can vote for members of the board as well as other things in the community. However, this also means that property owners are now going to have their properties inspected.

HOA inspections are a very important part of HOAs as they allow the board members to make sure the community is maintaining its value. The frequency of these inspections depends completely on the rules set by the association. Below, we will be discussing more about these HOA property inspections.

Sometimes, the HOA is managed by an HOA management company. These companies basically uphold the homeowners association rules and regulations but also have some other responsibilities.

What is a homeowners association manager?

A homeowners association or HOA manager is hired to manage a homeowners association on behalf of the HOA board.

They oversee the day-to-day activity of the community and manage all aspects from maintenance to member issues and events. 

Similar but different, a property manager manages a rental property for an individual or corporate investor. An HOA manager, on the other hand, manages a homeowners association for a board.

What are the responsibilities of an HOA manager?

Now, let’s talk about what an HOA manager’s responsibilities are.

What do they actually do?

Here’s a quick list of tasks an HOA manager typically handles: 

• Compliance and legal matters
• Budgeting
• Fee collection
• Monthly reports
• Accounting
• Insurance
• Property records
• Managing violations
• Administering reserve fund

One of the tasks of an HOA manager is to collect HOA fees, but we still don't really know what these fees are for.

In the next section, we will be discussing exactly what these HOA fees are and what they are used for.

HOA Fees

Most, if not all, homeowners associations have some sort of fee system in place. These fees serve various purposes and are generally meant to benefit the HOA community and keep the organization running.

These fees are not only important for keeping the HOA running, but to maintain the property values of the homes in the community. Below, we will explain more about what are HOA fees as well as what they do and what happens if they are not paid.

What do HOA Fees Cover?

Typically, an HOA fee can cover a range of services. These services depend on the property types as well as the community. Although most times, these services are for common areas, they are sometimes for some kind of utility that the whole community uses. Some examples of these services include:

• Water/Sewer Fees
• Garbage Disposal
• Swimming Pools
• Tennis Courts
• Lobbies
• Patios

Apart from maintaining these common areas and providing extra utilities to the community, a community association may also charge a special fee for a repair that is out of their budget, like a roof replacement. Although these repairs can be costly to the homeowner, they are important for maintaining or increasing property values.

As mentioned before, the fees for an HOA vary drastically. A normal range for HOA fees can be from $100 to $2500 a month, with the average being around $300 to $700. The higher the service fee, the more services you will be provided.

What happens if someone doesn't pay HOA fees?

In the case that someone doesn't pay their HOA fees, there are many different possibilities of what action will be taken by the association. The actions that the associations take depend solely on the contract between the homeowner and the HOA.

These actions may be as simple as charging a late fee or allowing the homeowner to have an extension. However, some contracts give the HOA permission to file a lawsuit against the homeowner or even foreclose on the owner's property.

Before, we briefly mentioned how HOA associations conduct inspections on the properties. But, we have not really gone over it in detail.

In the next section, we will be going over what these inspections consist of as well as some good ways to prepare.

HOA Inspections

One of the most important aspects of HOAs is that they conduct regular inspections.

These inspections allow the association to know if every property is upholding the rules and regulations of the association. If they are not following these rules, then they will get instructions on how to get in compliance.

For anyone conducting these HOA inspections, knowing exactly what needs to be checked and what should be inspected is extremely important. This is why having an inspection checklist is crucial.

Below, we have provided some of the most important things that should always be included in any inspection checklist.

Exterior Checklist

The first thing that should be included in the inspection checklist is the exterior of the property.

Structural Components

One of the first things that should be inspected is the foundation and the walls. You must make sure that there is no structural problem in the foundation and that the paint on the walls matches that of the rest of the houses.

If there are any problems with these, the HOA may cover these repairs, or they may order you to do the repairs.

Electrical Supply Boxes

An HOA maintenance checklist should also include any electrical supply boxes in the inspection.

This includes any electrical lines as well that run on your property. Sometimes, hiring a company to inspect these may be a good idea since it could be dangerous to inspect them yourself.

Wood Decks and Patios

Wood decks and patios also fall under this category and should be inspected. The reason for this is that these kinds of decks run the risk of growing mold or housing termites.

This could be a problem and it may lead to repairs, or a complete replacement, of the deck. A property owners association or condominium association may also order members to do a monthly or annual  inspection of these for pest control.

Interior Maintenance Checklist

Next on your checklist is the interior of your property. A thorough inspection of the interior would be done to ensure that everything is clean and that there is nothing broken within the property.

Walls / Roofs

One of the most important things that should be checked on the inside of your property is the walls and roofs.

When checking the walls, it is vital to make sure that there are no cracks in the walls that can let in water. These cracks can also let in cold air and serve as future structural damage. The paint on the walls will also be inspected as it may be fading or ripping off, and they may need to be repainted.

The roof is also a very important thing that will be on an HOA checklist. The roofs need to be checked thoroughly to make sure that there are no leaks anywhere on the property. If there are any leaks, that is something that will need to be fixed immediately. If there are gutters attached to the roof, those should be inspected as well.

Flooring

Another component of the interior of a property that will need to be checked is the flooring. The flooring of the entire property would have to be checked for uneven flooring. These uneven floorings may cause falls that lead to injuries. For this reason, the flooring must be thoroughly inspected and replaced if necessary.

Utilities Maintenance Checklist

The next part of your HOA checklist is the utilities on your property. These utilities vary in each organization, but we will be listing the most common ones below.

Air Conditioning / Heating

The most important utility that needs to be checked regularly is the air conditioning for your property. All units of the air conditioner must be in good condition and be working, including the condenser. Apart from the air conditioning, the heaters should also be inspected, like the hot water heaters.

Since not everyone has the expertise to perform these kinds of inspections, it is recommended that a professional, or someone with experience, perform these inspections.

Other Utilities

There are also many components of other utilities that need to be inspected, including phone lines, gas lines, water lines, and others.

The most important part of checking these is to make sure that there are no leaks within them. As mentioned before, these inspections cannot be done properly by just anyone so it is advisable that someone with experience or a professional conduct them.

Bottom Line

Whether you are renting the property or managing it, it is vital to stay on the friendly side of the HOA. If not, you could face severe legal repercussions that could cost you a lot of money. As long as you follow this guide and stay within all of the rules and regulations of the community, there should be no problem.