The Types of HOAs

 

Buying a home comes with a myriad of decisions, one of which may be whether to buy a property within a homeowners’ association.

So, what exactly are you signing up for when you purchase a home in, and therefore join, an HOA? Put simply, a homeowners’ association is a nonprofit organization designed to manage a collective of properties. Members typically pay monthly and/or yearly assessments to ensure the association can protect property values by maintaining shared spaces, enforce rules and regulations, and manage community events.

Pros and Cons

When it comes to the appeal of living in an HOA, you’ve probably heard stories both in favor of, and against, the purchase of a home in an HOA. Some potential buyers balk at the prospect of the fees they’ll owe to their association, while others find the expense well worth the access to amenities and carefree maintenance it affords them. While strict rules and regulations may seem stringent to some, many HOA members enjoy the assurance of a safe neighborhood and strong sense of community.

Types of HOAs

Even though HOAs are generally thought of in a broad sense, there are actually several types of community associations, each having a unique structure. Prospective owners can look for the following terms depending on the type of property they are looking to buy:

  • Homeowners Association – This most well-known type of association contains a board of directors who create and enforce rules and regulations. HOAs may also be subject to state law to ensure that the board acts in the community’s best interest. Board members are elected by homeowners and are typically volunteers who receive no pay for their services. Regular assessments are collected to upkeep and maintain the community.
  • Townhome Owners Association – Monthly fees tend to be lower for owners in a townhome association because owners pay out of pocket to upkeep their home, which includes expenses for most needed repairs. The association may oversee services such as weekly trash or recycling collection.
  • Civic Association – This type of association acts in much the same way as a regular HOA, but more casually. Fees are optional, and while there are rules and regulations, they are much less rigidly enforced.
  • Condominium Association – An elected board serves to set and enforce rules, and collects monthly assessments used to maintain common space and amenities in the condominium buildings. Individual owners own their own unit as well as a small percentage of shared properties such as pools, gyms, and spas.
  • Master Association – Often including a collection of subdivisions or neighborhoods, a master association usually collects fees from members to upkeep shared amenities and spaces like parks and roads. Members are also required to comply with regulations.
  • Housing Cooperative – Co-op residents are charged a monthly maintenance fee that is determined by the size of their unit. Each unit is a share of the building, and owners are required to help pay its operating expenses. Co-ops have the ability to regulate who is allowed to purchase a unit, including placing net worth or other monetary requirements on potential buyers.

 

Buying a home is a big decision, and its important to have a clear understanding of what type of association you’ll be joining, what services you’ll be getting, and what will be expected of you as a member.