cooldcre: Home Owners Associations in DC & NVA

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Home Owners Associations in DC & NVA

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DC Real Estate: HOAs

Home Owners Associations in DC & NVA

An HOA or Home Owner's Association is a not-for-profit corporation created by developers of residential housing communities in Virginia or Washington DC prior to a sales offering for the purpose of controlling the appearance, management and budget of the community.

The corporation is granted the power to govern the common areas and overall community appearance during the sales and marketing phases of  development.  Each property owner becomes a member of the association at purchase.

The association has a board which is made up of appointees and elected officers. At the inception of the HOA, the developer appoints members of the board and is in full control. When homeowners gradually join the board, the developer maintains a majority voting share by retaining the most seats through appointees.  Once a pre-determined percentage of sales is reached, usually 70 to 80 percent, the HOA turns over to a board of owners, while the developer retains a majority vote until the project is sold out.  At this stage, the developer transfers full ownership of the association to the homeowners and no longer has legal or financial responsibility to the corporation.

The association not only provides services and manages the community, it also has the authority to enforce regulations, levy assessments and impose fines for infractions by property owners.  HOA boards may also create subcommittees for such things as neighborhood watch,  landscaping and architectural review, even social committees. 

Members pay dues and assessments and must follow the rules set forth in the association's CC&Rs.

CC&Rs
The CC&Rs (Covenants, Conditions, and Restrictions) of the association are recorded at the time the property is subdivided.  CC&Rs legally "run with the land" so that each subsequent owner of a property is bound to them as long as he or she is a property owner in the community.

It's important to review the CC&Rs of an HOA prior to purchase in order to ensure that you can live with the rules, restrictions and penalties of the association.

Dues and Assessments
Property owners in an HOA pay a share of common expenses.

The association's operating fund is devoted to the operating expenses of the association and its reserve fund exists to cover common area assets maintenance, repair and replacement costs. If the reserve fund is well-funded, it will minimize the chance of special assessments being levied against property owners should a large common area repair or replacement, among other costs, become necessary.

It's important to review the budget, operating and reserve funds prior to purchasing a home in an HOA in order to ensure that the HOA is healthy. 

It’s Your Responsibility
Make sure you understand how the HOA operates and what your responsibilities are.

It is typically required by an association’s restrictive covenants (part of the deed restrictions) that you become a member of the HOA. It’s not optional.

Review the governing documents for the HOA within the rescission period specified in your contract. Pay strict attention to the CC&R’s (Covenants, Conditions, and Restrictions). They can contain provisions such as architectural restrictions, recreational vehicle parking restrictions, boat and water sport craft storage limitations, restrictions for commercial vehicles (even cars or vans with advertising displayed), pet restrictions, lawn maintenance requirements, and more.

HOA operating expenses are collected evenly among owners. These assessments can be due on an annual, semi-annual, quarterly or monthly basis. If you don’t pay your assessments as required, you will likely incur late fees and possibly a lien by the association, even foreclosure in some cases. Review the documents so you know exactly when and how the assessments are to be paid, and what remedy the association has if they’re not. 

Carefully review the financial health of the HOA.  Ask for copies of all budgets, pending and/or recent assessments, reserves, legal actions (pending or recent), and any other financial documents such as annual income and expense statement and balance sheets. Sometimes HOAs are required to furnish these and as a potential homebuyer you have the right to request them for review. If you don’t understand these documents, ask an expert! It’s better to pay a small amount of money than to make an expensive mistake.

The HOA’s Reserve Fund is an account for future capital improvements. Uses for this money can be private street maintenance, parking maintenance, repairs, replacement or maintenance for roofs and common building exteriors, clubhouses, pools, tennis courts, fitness centers, lakes, ponds, marinas, etc.

Special Assessments occur when HOAs don’t maintain on a regular basis, or when a major common element requires major repair or replacement and the Reserve Fund won’t cover it. Special Assessments get passed on to homeowners in addition to regular assessments. They can occur once, or be recurring. All owners are required to pay their share of a special assessment.

Almost all HOAs incorporate architectural restrictions. Homeowners often have to submit written requests for approval of changes. These can include additions to the dwelling, remodeling, addition or changes to fences, outbuildings, garages, pools, playground equipment, and even extend to exterior finishes, windows and doors as well as their hardware, paint colors and mailboxes.

  1. Who manages the association? Associations can be managed by a developer, a contracted management company, or be self-managed.
  2. How are meetings conducted? Are homeowners welcome? Do homeowners and the board have good interaction, or are they at odds?
  3. Do homeowners have a voice?  Talk to homeowners.
  4. How well does the board respond to homeowner issues and maintenance/repair requests? Are they professional in their interaction?  Talk to homeowners.

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Comment balloon 2 commentsThe Isaacs Team llc • November 11 2011 09:32PM

Comments

Great informative post!  I am sure many homeowners don't understand all of the terms.


Thanks!

Posted by Gina Tufano, Ask Gina & Company, Northern Virginia Real Estate (Ask Gina & Company with Pearson Smith Realty) over 6 years ago

Thanks Gina!

Posted by The Isaacs Team llc, BUY SMART. SELL SMART. HIRE SMART AGENTS. (Slate Properties 1121 5th St NW DC 20001) over 6 years ago

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