Living in the United States with soaring housing prices, I find myself wondering what will happen if I purchase a property that is part of a homeowners’ association (HOA). Will I even own the land after paying all that money? I know this is a common question that many potential homeowners have, so I looked into it.
In my research, I have come across some important information to share with you regarding land ownership in an HOA.
The HOA owns the land, while you own a portion of the HOA. So you own a small fraction of land, but not necessarily the land your home is on. You own the inside of your home and a random fraction of common indoor area. The HOA owns the exterior areas (e.g., roofs and outside walls) and most of the common indoor area.
Who Owns the Land Under My House in an HOA?
The HOA owns the land under the buyer’s house, not the homeowners.
You own a portion of the land that is owned by the HOA, but there is no guarantee that your land will be that on which your house stands. Even if it were, you might not own the entire stand. So, probably the more accurate way to say it is that the HOA owns all the land, but you own a fraction of the HOA.
There are some difficult ramifications of this division of land ownership in an HOA: if the house gets destroyed, the HOA can rebuild whatever they want or even vote not to rebuild at all.
While you, the homeowner, will receive an insurance payment for the home being destroyed, the HOA will always own a larger percentage of the land and thus can dictate what to do in this situation.
Does the HOA Own My Yard?
As mentioned in the previous section, you own an arbitrary portion of the land, but this does not include your yard. The HOA owns your yard.
The implications of this are that the association has authority over what you do in your yard, and this does not just apply to your front yard; the backyard is also owned and controlled by the HOA.
One of my relatives lives in an HOA, and she has to leave the side gate open so that the garden service can go around the house and into her backyard to mow the lawn whenever they choose to (or whenever the HOA instructs them to).
Not all HOAs will hire a garden service as they use in my relative’s HOA; however, the HOA can fine you if your yard becomes untidy or the lawn grows too long.
Often, homeowners can find this rather demotivating. Why spend time, cash, and effort on something that the HOA can alter anytime that they want to? While this is true, you should not be disheartened. You are given a certain degree of freedom in what you plant and how you landscape your yard. Just make sure you follow the CC&Rs.
Pro tip: if you plant native plants, the HOA cannot make you uproot them!
Another thing to point out here is that, based on the master deed, you should be able to improve your yard as you prefer throughout the years as long as nothing is directly attached to the house you purchased and as long as nothing you do violates the CC&Rs.
An example of something that would be Ok is resodding your yard. An example of a structure directly attached to the house is an enclosed patio, which would require written consent from the HOA ownership.
Do I Have Any Rights Over Common Areas?
One of the benefits of being a member of an HOA is that HOAs provide amenities in the form of common areas, and the maintenance of these areas is controlled by the HOA.
So, community buildings, fitness centers, playgrounds, common walking grounds, etc., are kept up, and you don’t have to add “put chlorine in the pool” to your weekly to-do list!
Of course, you do have to contribute money to the maintenance of these common areas. If you don’t happen to use them, then this can be frustrating, and many people considered paying for amenities that they don’t use as one of the reasons why HOAs are bad.
You, as a homeowner, will technically own a fraction of the common area, but the HOA still owns the majority. The community standards are stringently enforced, and uniformity is established, so homeowners do not have many rights over shared common areas.
However, all is not lost. Homeowners can have some rights over common areas by running as part of the HOA board. This will allow you to have a more significant vote on what the standards should be.
Furthermore, if the HOA board does not maintain common areas with due diligence as if it were their own property, owners can legally pursue a resolution that may align with their rights and desires over common areas.
Who Pays Property Tax in an HOA?
The HOA pays the property taxes for the home, while the homeowners will pay HOA service dues or fees that benefit the land’s common areas and owners’ interests. This is because the HOA is a large community that also individually owns private homes and does not want to double pay in taxation.
Thus, the HOA pays the property tax, but your HOA fees cover maintenance, common area services, and property taxes. This ensures that there is no occurrence of double taxation.
HOAs are generally subjected to inequitable taxation on common areas, so HOAs alert state and location government officiations about the possibility of taxation twice and draft HOA fees to avoid this.
What Does the HOA Insure and What Do I Insure?
The HOA fees that you pay will assist in paying for a master insurance policy that covers all common lands within the association, as well as the outside of your home and your yard. This master policy also protects the homeowners from liabilities in the case of others being injured in the community pool or barbeque area.
The master insurance policy will be in the name of the HOA, and they will pay, although your monthly fees will contribute to the premium. Homeowners must cover anything that occurs on their personal property, i.e., within their home or condo, as well as anything that happens to their personal property, i.e., cellphones, cars, etc.
Any private actions that result in someone getting injured must be covered by homeowners. Furthermore, any personal property damage within the walls of your own property must be covered by homeowners. Even any personal property within common areas will need to be insured by you and not the HOA since it is personal and not common property.
Can I Refuse to Join an HOA?
You can refuse to join an HOA if you are part of a voluntary HOA or if the HOA was formed after you bought the property.
However, there are mandatory HOAs, which do not give you the choice of opting out of joining with a membership. While the benefits of joining an HOA include protection from common area injuries in terms of HOA master insurance and general maintenance, the negatives of this association include large monthly HOA dues to keep up uniform appearances.
The bottom line is that if you are not in a mandatory HOA, you can refuse to join it. However, if you purchase a property within the jurisdiction of an HOA that requires membership, you will need to join the HOA, follow the rules, and pay the membership dues.
If this is something that you do not account for in your budget, you are better off looking for a property that is not governed by an HOA.
Related article: 18 Legal Ways To Annoy Your HOA