What in the world is an HOA?

There are lots of good internet sites to help educate residents about HOA's. I will list some good links later for some additional reading. The short version: 

A Home Owners Association (HOA) is an organization in a planned community that makes and enforces rules for the properties and its residents.

Normally, the paperwork to create an HOA is started by the properties owner and developer. They do this to provide a mechanism to give them the legal authority to create design guidelines, rules and community standards for the properties and to enforce those rules for as long as they are developing within the community. For developers, it is necessary to keep the community in a condition that shows off the community at it's best while luring potential buyers into their sales office.

Doing this also benefits residents. Most of the time, these rules and guidelines help keep property values up. Communities with amenities also need the benefit of an HOA to do the operation and maintenance on all of those amenities. The HOA has a controlling board of directors responsible for the community operations. The board is normally controlled by the developer while they are still building and then turned over to the residents when they have completed building.

In our case, the HOA is called "The Ponds Community Association" (PCA). Our HOA Board of Directors hired a management company to manage the property. They have a small maintenance staff and are responsible for bringng in outside businesses to cut grass in the common areas and amenity sites, perform maintenance work on the community pool, maintenance the community Farmhouse and Pavillion, refresh the pine straw areas, erect community signs, hang and remove holiday decorations, perform setup and removal for community events and many other tasks. They are also responsible for the lights, water and sewer fees on the common properties and the street lights. Unlike many communities, we have numerous community activities planned and run by the management company. They also handle reservations and take in the money for rental of the Farmhouse and Pavillion. The most dreaded one is the responsibility to enforce the design guidelines and the rules and regulations ordered by the PCA board. 

Of course, it costs money to do all of this. That is why you pay a mandatory HOA fee. It is not voluntary. Should you not pay it, the HOA can send collectors after you, can add on fees and penalties and even can impose liens against your home preventing you from selling it without paying off those debts. 

Prior to January 1, 2019, the property disclosure forms did not have a requirement for sellers to disclose that the house was in an HOA controlled community. Now this clause has been added:

"IX: WHETHER THE PROPERTY IS SUBJECT TO GOVERNANCE OF A HOMEOWNERS ASSOCIATION WHICH CARRIES CERTAIN RIGHTS AND OBLIGATIONS THAT MAY LIMIT THE USE OF THIS PROPERTY AND INVOLVE FINANCIAL OBLIGATIONS".

Whether it was on a disclosure form or not, once you signed the contract for the purchase of the house, you agreed to abide by the governing documents of the HOA. 

One of the biggest misconceptions about HOA Management companies is that they are employed by residents and must perform any request, any service that a resident requests. The HOA Management company is employed by the Board of Directors of the Ponds Community Association. The HOA management company makes no rules, regulations, covenants changes or design guidelines changes. Instead, they chair the committees that do that so that the Board of Directors can vote in or reject those changes. The HOA management company is responsible to enforce all of the Rules & Regulations and Design Guidelines currently in effect. They are only allowed to manage projects and amenities that have been turned over to them by the Board of Directors and with money approved by the Board of Directors. Other than that, they can only send requests and demands that are not within their given authority to act upon to the Board of Directors for action. They also lack the authority to demand that the Board of Directors respond or act upon any such request. Currently, Kolter Homes LLC chairs the Board of Directors and has enough votes to outvote the resident members of the board. Until Kolter Homes exits the commuity, the HOA management company is essentially controlled by Kolter.

For more information on Home Owners Associations, here are some good internet sites to review:

Investopedia - https://www.investopedia.com/terms/h/hoa.asp

Investopedia (9 things to know about HOA's) - https://www.investopedia.com/articles/mortgages-real-estate/08/homeowners-associations-tips.asp

HOA Usa - https://hoa-usa.com/