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Your Guide to Homeowners Associations

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When looking for a home in a metro Atlanta neighborhood, most people typically take into consideration affordability, proximity to work, the right schools for their kids and other logistical issues. However, if the home you like best is located in a community governed by a Homeowners Association (HOA), then there are a few other factors that you will need to consider before completing your purchase. And while understanding exactly what an HOA is and does may appear insignificant in comparison to the specific details of the home you choose—such as the size, number of bedrooms and bathrooms and the available outdoor space—this seemingly small detail can have a significant impact on the neighborhood, the changes you can make to your home and your monthly cost of living.

A Homeowners Association is a group of homeowners in a defined area that is governed by a board of neighborhood volunteers that oversees services for the community, including maintenance of common areas, establishment and enforcement of community rules and more. All HOAs are nonprofit corporations initially created by the developer who establishes the subdivision. To have his or her plan approved by the local municipality, a developer often agrees to form an HOA, which collects dues from homeowners in the community for infrastructure costs that would otherwise fall to the municipality, such as street and sewer maintenance, trash pickup and installation and upkeep of street lights. Those dues usually take the form of an annual fee.

In return, an HOA provides valuable protection for residents who live in the neighborhood and helps protect property values by ensuring that all properties in the subdivision meet certain standards; the latter is done by setting mandatory rules and regulations often referred to as Covenants, Conditions and Restrictions (CC&Rs) that homeowners must follow if they purchase a home in that subdivision. The Declaration of CC&Rs is the legal document that lays out the guidelines for the planned community. The CC&Rs are officially recorded in the county where the property is located, are legally binding and are part of your title. This means that when you purchase a lot or a home in a planned community with covenants, you automatically become a member of the HOA.

Because participation in an HOA typically is mandatory, it’s important for you to gather some information before you make your final decision on a home purchase—particularly about the fees. HOA fees vary greatly depending on the size of the community and the amenities provided in common areas. Because of this, you should make sure to ask your prospective HOA the following questions:

  • What do the annual fees cover?
  •  How are HOA fee increases set?
  •  How often do increases occur, and by how much have they historically been raised?
  •  Can I get a printed history of HOA dues by year for the last 10 years?
  •  How large is the HOA’s reserve fund?

In Georgia, the Georgia Property Owners’ Association Act defines the legal parameters for HOAs. The act requires HOAs to file a Declaration of CC&Rs with the state outlining the requirements every property owner within its legal boundaries must follow. Frequently, the bylaws include specific information that identify the geographic boundaries of the HOA, as well as the rules regarding matters such as fence construction, lawn maintenance, use of common areas, noise levels within the neighborhood, home additions, modifications or upgrades to the exterior of a house and more. An elected board oversees the HOA rules to ensure that all homeowners are in compliance with them; the HOA also serves as the entity through which you are granted permission to move forward with changes to your residence or address issues within the neighborhood.

As you move through the home buying process, it’s important to know that Georgia state law requires HOAs within the state to gain incorporation as either a business corporation or as a nonprofit membership corporation. The corporate name must include “Homeowners,” “Property Owners” or “Association” in the title, so these are the terms you must look for as you sit down to sign papers. The association is also subject to applicable laws regarding corporations in the state. Once you know that the neighborhood’s HOA has adhered to these regulations, then you can feel comfortable moving forward with your home purchase in that particular community. And when you move in, you can rest assured that your HOA will be there to protect your interests while keeping your new neighborhood in tip-top shape.

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