Did you recently purchase land in the US? Investment in real estate is an excellent way of generating passive income and doubling your investment, but do you know you can also form an HOA?

This blog will inform us more about HOA or the Homeowners Association. Read on to know whether a land owner can create an HOA in the US and other details here. 

Can A Land Owner Create An HOA?

Homeowners Association, commonly known as HOA has become more prevalent. Although it is always overwhelming for any individual to make a land investment to build a dream home, it is necessary to consider all other details, particularly those related to an HOA.

When a potential investor checks the lot size, style, zoning area, and other amenities before purchasing land in the US, a question that can pop up in his mind anytime is can a land owner create an HOA?

As per the available data, every homeowner is entitled to a bundle of HOA Legal rights in the US if he is a part of the HOA board members in his community group. It means every landowner can create an HOA along with other landowners in the nearby vicinity. 

Some of the HOA Legal rights are – 

1. Right of Possession: An individual who has the title of the property can claim to be its legal owner 
2. Right of Control: A homeowner can decide how he wants to use his property as long as it is legally permitted. It means in HOA, the owners need to follow community rules and regulations 
3. Right of Exclusion: Every land owner who has constructed his home can put limits on who can enter his premises provided there is no specific court or warrant order issued under his name. This also includes ease of access to utility workers who need to access the property for work purposes 
4. Right of Enjoyment: An owner can rightly participate in any recreational or pleasurable activities for enjoyment if they are legal
5. Right of Disposition: A homeowner can rightly transfer ownership of his house under another person’s name if he is willing to do it. The new owner must pay a lien on the property if it is already present on the accommodation space 

Homeowners Association

According to available information, homeowners association, or HOAs are privately formed groups that are responsible for creating legally enforceable rules that apply to a group of homeowners residing in nearby land vicinity.

These rules are usually certain conditions about what a homeowner and the surrounding neighbors are permitted to do or restricted on the property.   

The HOA fees are usually taken from the owners for the spick and span neighborhood maintenance including the nearby amenities like parks, landscapes, and areas surrounding the recreational spots.

It is essential for protecting the property and also ensuring the cost of land values in the area does not subside.

According to a survey done by the Foundation for Community Association Research in 2022, a majority of residents living in community arrangements including the HOAs were satisfied with living as per the rules and regulations decided by the board group. 

What Is HOA?

As per the definition, a Homeowner Association or HOA is an organization formed within a subdivision, planned community, or condominium building. This association is responsible for making and enforcing certain rules for the properties in their area and the residents living there.

According to the rule, the individuals who purchase a property within the jurisdiction of an HOA are automatically viable to become its members and must abide by its rules. They are required to pay their dues, better known as HOA fees.

Some of the HOAs are very strict and restrictive, and can even enforce rules about what activities are permitted inside the properties while some provide comparatively more freedom to the residents. 

What are Homeowners association fees?

According to the available information, some HOAs in the US apply significant financial and legal power to the property owners that come under their zones. Under this, the HOAs possess the right to collect monthly or annual HOA fees from the owners. These HOA fees are dependent on several factors, namely, 

1. Number of properties in the group 
2. Location 
3. Type of the property 
4. Operating expenses 
5. Amenities offered to the residents

As per the data available in 2021, the HOA fees usually range between 200$-400$.

However, they can even range from anything between 100$ to 10,000$ depending on the communities or luxurious neighborhoods. 

These HOA fees are often a major contributor to HOA reserved funds, which are deliberately kept aside for major renovation projects in the area or for emergency purposes.

Furthermore, apart from the HOA fees, the homeowners association can impose certain assessments on the owners if it lacks sufficient reserve funds. These assessments are usually done to carry out unexpected repairs for maintenance on common areas like parking lots, sidewalks, etc. 

Usually, it is the responsibility of the HOA board for managing the organization’s financial structure. They are liable to overview the collection and management of HOA funds.

In addition to setting dues and assessments on the owners, the HOA board has the right to impose fines on owners who break rules, cause damage to common areas, and do not pay fees.

Apart from imposing penalties on the owners, HOAs have the right to place a lien on the property if the owner seriously delays the dues and indulges in repetitive behavior over a certain period. 

The HOA fees depend on the area where the owner lives and the amenities offered in the community. Some of the services included in it are – 

1. Security 
2. Trash pickup 
3. Maintenance and repairs 
4. Landscaping 
5. Community gym, pool, or other common areas 

What Is A Homeowners Association?

Homeowners associations, better known as HOAs are private organizations responsible for the effective management of residential communities in the US.

These organizations establish a set of bylaws for the residents in the community which are expected to be followed by them. The HOAs are also in charge of common-interest communities like 

1. Planned neighborhoods
2. Planned townhouses 
3. Multi-unit apartment buildings/condominiums  

The rules set up by HOA are designed to protect the neighborhood from degradation and also maintain property values. The HOA fees are usually used for the maintenance of common areas and they assist to keep the entire area visually appealing. 

How to form a Homeowners Association  

A homeowners association (HOA) is usually formed by developers when a new community is constructed. Hence, land buyers are required to join the HOA.

It is often seen that the lot purchasers wind up joining an HOA without sufficient understanding of what they are or how they work just because they like the lot or want to build a home on it. 

Steps to establish an HOA 

1. Establish a business structure – Form an LLC or nonprofit corporation 
2. Create CC&R: Formulate covenants, conditions, and restrictions (CC&Rs) that tell how the HOA would operate and what regulations would be imposed on the homeowners 
3. Modify rules and regulations: Fix a procedure that would aid in the modification of CC&Rs in an easy-to-understand language for the community residents
4. Decide the governing documents: Determine which governing documents like articles of incorporation and bylaws outline the meeting frequency for HOA, voting guidelines, and election process for HOA leaders as well as other operating procedures in advance 
5. Electing HOA board members/ officers as per the required qualification: An individual who aspires to become an HOA board member must have a significant understanding of its money management, keep accurate books records, have up-to-date knowledge of real estate laws, and must abide by the local, federal and state government laws

If you do not have any land owner aware of the above steps and rules for HOA in the vicinity of where your lot is located, it is best to hire the services of a professional HOA to avoid discrepancies and faults. 

What are Homeowners’ rights against HOA? 

The homeowners or land owners wanting to build a house on their acquired property are entitled to some rights against HOA such as – 

1. They have a right to change the rules and regulations fixed by HOA if they are outdated, unfair, or discriminatory 
2. The individuals can question HOA fees and assessment charges and know where it is being used 
3. The homeowners can ask for access to HOA documents and their financial reports 
4. These individuals have the right to sideboard members of homeowners associations and attend their disciplinary hearings 
5. Homeowners can make use of political signs depending on their location of residence and laws and even display the U.S. flag 
6. Individuals with disabilities have the right to request reasonable accommodations to HOA
7. These individuals can install satellite dishes, antennas, and solar installations on their roofs without any restrictions for HOA due to Over-The-Air Reception Devices Rule
8. They can right to plant or grow native plants at their place (Exception: California and Texas)

Landsale4U is an ideal website for land buyers who have a keen interest in doing land investment in the US. We offer the quality vacant land you desire at discounted rates that would suffice your pocket.

Get in touch with us to receive notifications about available properties in the US and get a chance to become a board member of the HOA.