What is an HOA?

January 17, 2024

For most anyone looking to purchase a condo or house in our resort area, the term HOA pops up at every turn. Chances are an HOA down here is slightly different than your neighborhood association back home, so I’m going to give a broad overview of what an HOA is and what it covers. Keep in mind, this is a broad generalization based on my experience working in property management and selling real estate here along Alabama’s beautiful Gulf Coast.  

First, a Home Owners’ Association (or condo owners’ association or property owners’ association—to simplify we will treat them all the same) is an organization within a residential community, complex or neighborhood that establishes and enforces rules and regulations for the properties and residents within its jurisdiction. HOAs are typically formed when a development or community is created, and they are responsible for managing and maintaining common areas, amenities, and enforcing community guidelines.

Homeowners who live in a community or condo complex governed by an HOA / COA / POA are usually required to pay regular fees to cover common area maintenance, amenities, and other shared expenses.

Reasons why HOAs are formed and considered necessary:

 1. **Maintenance of Common Areas:** HOAs take care of shared spaces like pools, gyms, landscaping, and recreational facilities. This ensures a consistent level of upkeep and aesthetics throughout the community.

2. **Rule Enforcement:** HOAs establish rules and regulations to maintain a certain standard of living within the community. These rules often cover property appearance, architectural changes, and behavior guidelines for owners and their renters alike.

3. **Community Amenities:** HOAs often manage and provide amenities such as pools, gyms, security services, and other facilities that enhance the quality of life for residents.

4. **Property Value Protection:** HOAs aim to protect property values by maintaining a well-kept appearance and enforcing community standards. This can be appealing to potential buyers and investors.

5. **Dispute Resolution:** HOAs can act as mediators in disputes between neighbors, helping to resolve conflicts and maintain a harmonious living environment.

6. **Financial Management:** HOAs collect fees from homeowners to fund common area maintenance, amenities, insurance, and other shared expenses. Proper financial management ensures the association's long-term sustainability.

While HOAs offer benefits such as community maintenance and amenities, it's essential for homeowners to carefully review the association's rules, fees, and financial health before purchasing a property within an HOA-governed community. Understanding these aspects helps ensure that the HOA aligns with the homeowner's preferences and financial considerations. I will discuss this further in subsequent blogs.

The HOA in a condo complex serves a greater purpose than just making rules for occupancy to keep the place looking nice. A condo’s HOA also purchases the insurance for the building (which is a HUGE undertaking and extremely important), maintains the amenities, maintains the building exteriors, and pays for some of the utilities. All of these great services are funded by the monthly HOA fees, so when we are looking at condos for you to purchase, we can compare monthly HOA fees and what each fee covers to make sure you are getting the best deal.

An HOA in a neighborhood serves a little different purpose. Each home will be insured by each owner rather than through a master HOA policy, so the monthly HOA fee in a neighborhood will generally be much lower. The HOA is also not likely to cover any of the utilities. What a neighborhood HOA does is make sure the neighborhood and the neighborhood amenities are maintained. Its primary goal is to make sure the neighborhood itself looks nice and retains its appeal to future homeowners. Heck some will even cover lawn maintenance to ensure aesthetic appeal.

To summarize, an HOA can be a great asset to a community. Don’t see an HOA fee and get sticker shock, because the fee includes some of the costs you would have to bear yourself, mainly condo building insurance. If you have questions about a particular HOA and what is included in a fee, I’m happy to run that information down for you. 

And, as always, if you want to search for beach condos and houses, please visit my website at: https://jordanbodenhamer.youngssuncoastrealty.com/