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FAQ: What is HOA?

Posted by: raindrop 8 years, 11 months ago


HOA is an abbreviation for Homeowners Association. A Homeowners Association is created by a developer upon the completion of a project, such as a subdivision or a condominium. The HOA governs the rules for the area as well as decides how money is spent.

A HOA generates money through HOA Dues that are paid monthly by the homeowners. In newer subdivisions and condos, the HOA dues are set by the state using rigid guidelines. The dues are designed to pay for any ongoing maintenance and any future repairs. Therefore, a portion of the dues immediately get put to work paying bills and the rest go into reserves accounts. Unlike state bonds such as mello-roos, HOA dues never get paid off, and they can increase.

It's very important that the reserves are funded in an HOA so that when a big expense occurs (since as the need to replace the roof) the HOA has the funds to pay for the repair. If the HOA does not have the funds to repair big expenses, they must vote on an assessment to cover the amount due.

The HOA is typically run by a board of directors, who are voted on by the homeowners. In some HOA's there is also a management company who collects the HOA dues and pays the bills on behalf of the Association. The management company's also do yearly audits and periodic reserves studies.

It is important for Buyers to understand what an HOA does and whether they feel comfortable purchasing a home in an HOA. Oftentimes HOA's are necessary and helpful, but it is an added cost that some people don't anticipate.

For more information about HOAs or about buying or selling a condo, contact Kate Gillingham. Kate has ample experience representing clients through condo escrows. Kate can be reached at (619) 933-5319 or



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