I understand what HOA’s do, and was first introduced to the term in a condo building (not mine). I understand in a condo building, or high rise, you’re all sharing one building and need to contribute to that building’s maintenance. But I don’t understand HOA’s in neighborhoods…when you live in your own house. Is it only certain neighborhoods? I know someone who lives on a nice street in a suburb and there’s no HOA. Who decides if there is one, and what do neighborhood HOA’s exist for? Are you allowed to opt out?
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Neighborhoods have areas that aren’t covered by homeowners, like recreational areas and watershed areas (possibly even the roads, but those are usually handled by the city/county). On top of that, there’s usually agreements to keep a consistent look among homes, so some don’t become eyesores.
These are usually set up while building the neighborhood, before anyone buys homes. When you buy a home there you agree to the rules and fees needed to cover maintenance of the other areas. Once homeowners move in, the HOA is turned over to the people that live there. They vote on people to be on the board for the HOA (usually unpaid, but see below).
Those members can be replaced by a vote. The rules can also be changed by a vote. Variances to the rules can be granted by the board. Let’s say the rules state that only chain link fences can be installed in the neighborhood. You can take plans to the board for a wooden fence, and they may agree its fine to have a wooden fence, even though the rules state they’re not allowed.
A lot of the time, that’s it. There’s no issues. Sometimes, board members abuse their power. They may only grant variances to themselves or friends. It really starts to become a problem when those board members control a lot of votes, like they own a couple dozen homes/condos and rent them out. Enough votes on their side and the board members can’t be replaced.
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