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The community management association is a fundamental consideration if you plan to buy a home. You’ll likely have to take part in it as well.

 

What can you expect from living in a community association? That’s what you’ll learn today, as well as a few tips on how to build a better association.

It depends on the type of community association

The Community Associations Institute splits community associations into three types in its introduction to association living.

 

The association category depends on space ownership by the homeowners.

• Planned communities

The most common type of community management entitles homeowners to the property, residence, and its lot. Residents own their interests separately from their neighbors.

However, membership is mandatory, and common areas belong to the association, though members still have obligations with them.

• Condominiums

In condos, homeowners usually own the space within their homes. However, the land underneath their unit and its physical boundaries are not their property.

However, owners usually act as co-owners for common areas. The association may still own properties, but it depends on state law.

• Cooperatives

In the rarest community association category, a corporation owns all properties making up the cooperative. Homeowners are entitled to shared interests and occupation rights.

Board members are more similar to shareholders, and the association owns more than common areas.

Rules and fees

Most homeowners relate their community management association with regulation. Assessing your association’s rules is the first step to get along with everyone.

Let’s go through the most common types of rules.

Esthetics

Most community associations are relatively strict with what homeowners can do with their homes’ exterior. It’s more prevalent in condominiums, but you should always ask about outdoor decorations before breaking any rules from your association.

Pets

Not all communities are pet-friendly, but even the ones that are might have restrictions. Check whether pets are allowed and which races are permitted.

Occupancy

Your community association may limit whether you can rent your home for short or long terms. Some communities may also restrict the number of people per unit.

Vehicles

Finally, some associations restrict specific vehicle categories, like food and business vehicles, boats, and trucks.

Governance

Governance depends on the type of community association, but most communities follow the same approach. All homeowners are members of the board, and they’re responsible for partaking in meetings and decisions related to rules and community developments.

Community management

Finally, we can split management approaches into three categories. A community management association can come in many ways.

Homeowners aren’t always direct managers. The association can come from volunteer work or third-party services.

• Volunteering

Volunteer community associations work from the homeowners’ will. The board manages the association directly, or they can create committees with groups of residents.

• Association employment

Some associations prefer to employ a dedicated community manager. This manager works under the board’s direction for a salary.

• Management firms

Finally, the community association can hire a management company. These companies send a representative who acts as the community manager.

For many, homeowner associations are necessary for any neighborhood. They help keep everything organized. Today, many prospective buyers look solely for homes tied to an HOA. However, the pros and cons of HOA management companies still require consideration.

You might think that an HOA increases a property value due to its advantages. While it mostly does that, it’s somewhat more complicated.

What does a homeowners association do?

Essentially, HOAs keep neighborhoods organized. They aim to protect homes’ market values from damages and other adverse impacts coming from homeowners. They enact rules to guarantee a community’s cooperation and healthy relationships.

HOAs often impact neighborhoods’ curb appeal positively. Without them and their rules, keeping good-looking properties can be more challenging.

That translates into better communities

HOA rules usually hold communities to higher standards. Many homeowners admit to improvements in the neighborhood after creating or hiring an HOA. That goes beyond the moral and social implications, as property values usually improve as well.

HOAs often focus on property value

Most people believe that an HOA merely works toward harmonious neighborhoods. However, the financial benefit of HOAs is their value protection. Most HOAs focus explicitly on ensuring market values.

 

However, we’re still analyzing the pros and cons of HOA management companies. Therefore, we’ll dive into the negatives in a bit.

Value goes beyond numbers

When a home’s value, we need to consider more than its market numbers. Many people are willing to spend more on a home if they know they’ll get along with neighbors and won’t have to worry about property damages.

Improving properties

Speaking of damage, HOAs protect homes from deterioration—both from the surroundings and owners. HOA companies help guarantee that the property is in good shape for future buyers.

How does the price reflect this?

In the end, supply and demand drive market values. HOA management helps keep properties’ attractive, which entices more buyers. As such, an efficient HOA can benefit homes’ prices noticeably.

HOA and property taxes

When analyzing the pros and cons of HOA management companies, people tend to overlook taxation. The relationship between HOA and property taxes is relatively complicated, but we’ll do our best to summarize it.

 

Essentially, HOAs can result in double transactions due to common areas owned by the association. These organizations can avoid this issue by separating properties and alerting authorities about inequities.

Legally complicated

The tax implications from HOA require study and legal consultancy in most cases. HOAs need to take several steps to ensure the community doesn’t suffer from double taxation, and the process can be lengthy.

Lower property value by law?

A primary law principle is that property values decrease with rights carved from the assets to benefit other parties or properties. The latter would acquire this lost value, and HOAs could account as said third parties.

What can communities do?

The best approach for communities is to appeal to property separation between what’s owned by individuals and the HOA. Additionally, appealing the transfer valuation can help lower property taxes in the community.