Month: October 2018

With over 350,000 homeowners associations (HOA) in the United States, a large portion of these associations are responsible for managing townhome communities.

If you are in the market for a new townhome that is managed by an HOA, it is crucial to understand exactly how townhome associations operate.

What do Townhome Associations do?

Townhome associations serve the same function as any other homeowners association. Their ultimate mission is to help maintain the quality of life for community residents and protect their property value.

These associations achieve these goals by enforcing regulations and collecting assessments from homeowners, while also taking care of maintenance repairs and upkeep of common areas.

Through the homeowner’s monthly fees, HOA’s fund and provide services that keep the community in good shape.

Common HOA services include lawn maintenance, garbage removal, and building repairs. Luxury communities may also provide more exclusive services such as 24-hour valet and a concierge.

Many HOAs also help manage community amenities, including neighborhood pools, gyms, and clubhouses.

What Rules do they Have?

For homeowner associations to carry out their functions to the best of their ability, they need cooperation from the community members. Townhome association’s expectations of unit owners are laid out as rules in their covenants, conditions, and restrictions (CC&Rs) within the governing documents.

Each townhome association is responsible for creating their own set of CC&Rs upon establishment.

Many common townhome associations rules revolve around financial responsibilities, pet regulations, rental guidelines, and maintenance standards.

Whatever the CC&Rs may be, they are not voluntary. Residents have a legal obligation to follow these HOA rules or they may face fines or legal action.

How they Differ from Condo HOAs

The major difference between townhomes and condos comes down to ownership. Condo owners have title to everything within the unit, while townhome owners have the right to the inside of the unit as well as the land that the unit sits on.

Despite this difference, townhome associations operate very similarly to condo HOAs. Both are responsible for maintaining the common grounds, structures and systems in the community and both rely on funding from unit owners.

Often, townhome owners are responsible for more upkeep than condo owners, which means the HOA is less involved. This lower involvement by HOA frequently results in lower monthly dues for townhome owners.

Since townhome owners own that land that their property sits on, they may be responsible for maintaining the outside. However, frequently HOA will still take care of this area through monthly fees.

Townhome associations help to preserve communities and take some of the burdens off residents.

In the United States, Homeowner Associations spend over 80 million cumulative hours of service annually. So what exactly is all of this time spent doing?

We are here to provide some insight into what homeowners association can do and what their roles are in the communities they manage.

How HOAs Help the Community

Homeowner associations came into existence in the mid 19th century but did not begin picking up traction until the 1960s. Since then, HOAs have increasingly become a common method to manage community developments.

Currently, approximately 23 percent of the U.S. population belongs to a community association.

Ultimately, homeowner associations are in place to help maintain the quality of life for community residents and protect their property value.

Through funding from homeowner’s monthly fees, HOAs help provide services that keep the community in good shape.

Common HOA services include lawn maintenance, garbage removal, and building repairs. Luxury communities may also provide more exclusive services such as 24-hour valet and a concierge.

Many HOAs also help manage community amenities, including neighborhood pools, gyms, and clubhouses.

How they Help Resale Value of Condos

Homeowner Associations help communities beyond day-to-day operations by maintaining and improving resident’s property values.

Research reveals that HOAs have the potential to increase residential property values through neighborhood preservation, restrictive covenants, and enhanced efficiency.

Neighborhood preservation focuses on maintaining curb appeal. The HOA rules and regulations ensure that the community stays in tip-top shape and desirable for potential buyers. The provision of services provided by the HOA, such as garbage removal and community maintenance, as helps to keep the neighborhood in pristine condition.

Restrictive covenants set by the HOA ensure that communities maintain a certain level of quality. These rules may include restrictions and limitations of types of pets owners can have, the number of cars parked in a driveway, and location of satellite dishes.

HOAs enhance community efficiency by creating an organized structure to address a variety of issues in the most effective manner. By addressing multiple issues such as crime, aesthetics, neighborhood behavior monitoring, and professional management,  HOAs are potentially contributing to increased housing prices.

Enforcing Rules and Fees

For homeowner associations to carry out their functions to the best of their ability, they need cooperation from the community members. Rules and fees help accomplish this cooperation.

HOAs enforce fees to help fund their services and amenities they provide to the community. Property owners are required to pay monthly dues as members of the homeowners association.

To ensure accountability, HOA also implements rules in there governing documents that property owners are expected to follow. Otherwise, penalties, such as extra fines or legal action may be taken. Many of these rules enforce timely payments of fees and restrict residents from trashing the outside of their units.

When it comes to understanding what homeowners associations can do, it is essential to know that these organizations are in place to better serve and preserve communities.

While most homeowners aren’t surprised that HOAs come with their own set of rules and regulations, many people still have questions regarding the specifics of these rules.

As members HOA, it is essential that unit owners have a clear understanding of their condo HOA rules. Otherwise, they may face unwanted penalties.

To avoid these consequences and feel more confident as a member of HOA, we are here to help break down these rules so that you know exactly what is expected of you as a homeowner.

What Rules Condo HOAs Have to Follow

As formal establishments, condo HOAs are not exempt from following a set of rules.

First, it is important to understand that there is an HOA board and management company responsible for making sure a condo community runs effectively.

The two different entities have their own roles and expectations.

The HOA board is comprised of elected volunteers, often community residents, who help manage the upkeep of the community. Here are a few basic rules and expectations of a condo HOA board:

• Act in a fair and consistent manner
• Refrain from voting on issues or making decisions that present a conflict of interest
• Maintain confidentiality
• Treat homeowners and other board members with respect during discussions and throughout any dispute resolution

The HOA board hires an HOA management company which provides helpful business advice and facilitates day to day operations. Their role is to implement the guidelines set by HOA, ensuring that they work in accordance with the state and national laws that protect homeowners.

What Rules Condo HOAs Expect you to Follow

Every homeowners’ association establishes their rules through their own covenants, conditions, and restrictions (CC&Rs). These CC&Rs apply to all condo residents and cover expectations regarding resident behavior, architecture, and common responsibilities.

Many common condo rules and regulations revolve around financial responsibilities, pet regulations, rental guidelines, and maintenance standards.

Arguably one of the most critical expectations as a condo owner is paying monthly HOA fees on time. These fees are non-negotiable and critical for HOA to fund services and amenities for the community.

How Rules are Enforced

Whatever the CC&Rs may be, they are not voluntary. Residents have a legal obligation to follow the condo HOA rules or they risk facing fines and/or legal action.

Generally, if the HOA board notices that a resident is not following a rule or missing HOA dues, a warning will be set in place- often in the form of a written letter. Along with the letter, residents may receive additional fines on top of their monthly fees. If you don’t pay the fine or respond to letters from the board, property manager, or a collection agency, the HOA can and will turn to small claims court or file a lien against your property.

To avoid any one of these penalties, it is crucial to follow the rules and pay your dues.

As a homeowner, it is part of your responsibility to know and follow the condo HOA rules. This will ensure a better community for all parties.

Among the more than 300,000 community associations in the United States, only about half maintain their insurance policy. Out of that half, only about 25 percent maintain adequate coverage.

This is problematic because HOA insurance is a crucial aspect of any community managed by an association.

If you want to make sure your current or potential condominium is insured sufficiently, here is everything you should know about condo HOA insurance.

What Kind of Insurance do Condo HOAs Have?

If you are living in a property managed by an HOA, the chances are that a portion of your mandatory monthly dues is helping to fund the homeowner association’s insurance policy.

To protect everything managed by the HOA, it is crucial that condo developments have what is called a master policy. Without this form of coverage, the HOA may levy special assessments on unitholders if an unexpected disaster was to occur and the building would need extreme repairs.

HOAs must be sure to also have hazard and liability insurance for specific areas of the condominium development, often including common areas, like stairwells and pools, and some exterior elements such as the condo’s roof.

Additionally, many homeowner associations purchase Directors and Officers Insurance as well as employee theft protection to ensure the financial security of the HOA and the people running the HOA.

What is the Insurance Meant to Cover?

Master policies generally cover damages and personal injury. The damages covered by a master policy involve damages to the shared property, which may be a result of storms, fires, criminals, etc. General liability insurance covers costs of any lawsuits for medical expenses filed by people injured in the common areas of the property.

Directors and Officers Insurance policies: This specific type of insurance covers both legal defense costs and damages if a homeowner decides to sue its HOA. This policy does not cover intentional misconduct.

Employee theft insurance can protect the association if a director, officer or property manager embezzles HOA funds.

How can you Check that your HOA has the Right Insurance?

To ensure that your homeowners’ association has sufficient coverage, it is critical to thoroughly review your community’s master insurance policy. Check to see what the policy covers in case of emergency and what your HOA is responsible for.

It is also helpful to make sure that the HOA governing documents do not conflict with your HOA master policy regarding the HOA duties to the unitholders.

Now that you have more insight into the importance of HOA insurance, be sure that your potential condo HOA is adequately insured before you purchase.

According to the U.S. Census Bureau, the average HOA fee runs residents $396 a year. This same research study also reveals that these numbers are on the rise.

So why exactly are homeowners required and willing to pay these extra costs? Well, we are here to help better answer that question.

Why are there HOA Fees for Condo Owners

Although homeowners are quick cringe at the word “fee”, the reality is that these expenses help maintain the upkeep of the neighborhood and quality of life for condo residents.

When people become condo owners, they also become automatic members of an HOA. With this membership comes monthly or annual dues to help fund the amenities and services the association provides.

HOAs also increase the exclusivity of condos, increasing the desirability of the property for current and future unit owners.

What do the Fees Pay For

Condo HOA fees may fund a wide variety of services and amenities. That is why it is crucial for prospective home buyers to investigate HOA policies before purchases to learn precisely what the dues cover.

Most HOA policies will cover basic services, such as building maintenance, landscaping, and garbage removal. Common amenities may also include a pool or gym.

Higher-end condominiums often utilize member fees to help fund luxury services and amenities. Today it is common for exclusive buildings to provide valet, a concierge desk, spas, and other resort-like features.

Naturally, the more services and amenities provided, the higher those monthly dues will cost unit owners.

A smaller portion of HOA fees goes towards the association’s administration, including legal, accounting, and management services.

What if you Don’t Pay the Fees?

So what happens if you miss a monthly fee?

While the repercussions may vary depending on what state you are in, there are basic penalties that the HOA will put into action.

First, be prepared to receive a letter reminding you of your outstanding debt immediately. The HOA may also add on a fine and/or interest on that missed payment.

Often, the HOA may also revoke homeowner rights. This may include taking away your privileges to vote on HOA matters or utilize common areas, such as a gym or pool.

To avoid these consequences, be sure to pay your fees in a timely manner; and if you do happen to miss a payment, make sure to keep open communication with your HOA board to resolve the issue and minimize penalties.

With a better understanding of condo HOA fees, we hope you feel more confident navigating your next home purchase! Experienced real estate brokers are also available to help make the process even smoother.

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.