Why Do I Have to Pay HOA Fees? And Other Questions About Managed Communities

( Published Thursday, June 07, 2018)

tiny toy homes surrounding letter blocks "HOA"

Why I think we should all live in a managed community.

I enjoy many aspects of living in a managed master-planned community—the community spirit and engagement with neighbors, beautiful green space, the amenities, and the peace of mind that comes with living in a well-maintained neighborhood. Someone asked me recently what HOA fees were used for. As someone who has been involved in managed master-planned communities for years, I have a unique perspective about Homeowner's Association (operating as a Residents Associations) and offer my insights here.

What is a Residents Association or Homeowner's Association (RA/HOA)?

A Residents Association or Homeowner's Association is a not-for-profit company governed by an Act and are created to ensure that certain features, amenities and facilities of a master-planned community are maintained and managed for the long-term use and enjoyment of its member residents. Each RA/HOA sets a desired course for the use of common land and facilities, such as clubs, tennis courts, skating rinks, splash park or water park, and other amenities, and helps ensure their financial sustainability over time. 

There are many benefits to living in a managed master-planned community. Residents benefit by having certain amenities and assets in their community, which because of their unique nature, could not otherwise be provided as cities would not normally accept responsibility for their maintenance —such as, in some cases, common community green space maintenance and well-maintained grounds that are owned by the RA/HOA, private lakes and clubs, facilities, programs and community events. There are guidelines to consider as well—rules, regulations and fees—so it pays to do your research before you commit to buying a home in a managed master-planned community.

Get Our New Guide:  The Guide to Selecting Association Management Software

What is covered by HOA Fees?

The first thing you'll want to do is research the managed master-planned community; find out what amenities are provided, the annual fees, and review the association's rules (bylaws and/or covenants). Make sure you understand the responsibilities of the encumbrance that is registered on title and that you are comfortable abiding by the association's encumbrance.

As I said at the top of this article, many people wonder why they have to pay HOA fees. Fees are critical to maintaining a quality standard for amenities in a master-planned community and covering a host of expenses. Each property, in a managed master-planned community has an encumbrance registered against each homeowner’s title that makes it mandatory.   

The funds are spent to administer and operate the amenities of the managed master-planned community including facilities, utilities, property taxes, insurance, staffing, programs, landscaping, maintaining open spaces in the community, and administration costs.

What is the HOA responsible for?

Every managed master-planned community has a governing board of directors who are responsible for administering the RA/HOA bylaws/articles of association. The board members are elected by members-in-good-standing of the community. Your HOA board may be responsible for much of the
membership and property management tasks, including:

Ask questions about property values, responsibilities, and fees.

When doing your research about an existing community, or a new development, ask the following questions:

  • Is this a master-planned community?
  • Is there an encumbrance registered on each property owner’s title?
  • What is the city or municipality responsible for in the community?
  • What is the RA/HOA responsible for?
  • What happens if you don’t pay your annual dues?
  • Can you opt-out of services that are governed by the encumbrance on title?

Additional Value

In my experience, living in a managed master-planned community provides the following additional value:

  • Property retains market value
  • Community out-sells other non-master planned competition
  • Residents tend to stay in the community

Living in a managed master-planned community may be the right lifestyle decision for you. Make sure that you consider all of the benefits and guidelines of the community you choose to call home. You may find yourself like me one day, educating others on the many benefits you receive from those annual RA/HOA fees.

Get Our New Guide:  The Guide to Selecting Association Management Software