What is an HOA? People ask me this question a lot. Most people have a broad concept of what this is. It’s, the annoying people who complain when your shrub isn’t trimmed just right, right?
There’s a lot more to them than that.
HOA Legally Speaking
Legally speaking, a Home Owner’s Association (HOA) is a nonprofit entity that is can be registered with the state or not. In North Carolina, it is most common to have these registered. The registration protects all parties involved.
Boards govern all nonprofits. Home Owners Associations are no different. Those who sit on the board are typically called directors or trustees. Your neighbors elect the directors to make decisions on behalf of the association. Often the legal documents will specify that the directors must be homeowners in the neighborhood.
Where Did They Come From
Your HOA came from one of two instances. The first instance occurs when the upon subdividing or developing the land. The second instance occurs if the homeowners in your neighborhood got together at one point to agree to create the HOA. The first instance is most common.
Where Do They Get The Power?
The HOA has its power through its articles, covenants, and declarations. When you bought the house, you agreed to give the HOA power, and you did not have a choice. Your home’s deed contained information about the HOA. Unfortunately, the declarations run with the land. If the land transfers ownership, the association still controls up to the limits set in the declarations,covenants, and articles.
Of course, you and your neighbors can one day agree to disband the HOA. That process is not an easy one.
What Do They Do?
Great question! An HOA is only as active as its board. If you have a board that is focused on enforcing rules against their neighbors, that’s what they do. Often, you have these associations so that there is some entity that exists to take care of land or amenities that all neighbors get to use, like street lights, streets, pools, and green spaces.
If you like that sort of thing, many HOAs take care of your lawn maintenance.
Of course, HOAs collect dues. Nobody likes to pay dues, but most people like having a clean and safe neighborhood. These can range from $5 per month to thousands. It all depends on where you live and what your association provides.
If you don’t pay your dues, North Carolina law provides that the association can foreclose on your home. This is after they’ve attached several fines and attorney fees to your overdue balance. It is incredibly costly to be late on your dues. This process is very similar to mechanic’s liens in a prior article.