What you need to know about your homeowners association (HOA)

The HOA or co-op board is elected by community residents, condo owners, or co-op shareholders. The board sets the community standards, rules, and regulations; collects the fees; and enforces the rules.

These are usually outlined in a Declaration of Covenants, Conditions, and Restrictions (CC&R) or in the by-laws of the condo or co-op.

This is an official document stating community rules, regulations, and fees. By purchasing a home in the community, you agree to live by the CC&R and to pay your membership fees.

HOAs and co-op boards are elected by the members of the association or co-op, and therefore they represent the property owners. Homeowners have the right to recall board members (or even sue) if board members do not fulfill their legal requirement to act in the community’s best interest and in accordance with all federal, state, and local laws. Board members also must abide by HOA rules and co-op bylaws.

Fees vary widely depending on your location, the age and condition of the property, the property value, and amenities.

A portion of the fees should go toward a reserve fund. This is like a shared savings account reserved for major community expenses, such as a condo or co-op roof replacement. Examining the financial statements of the HOA or co-op corporation, which you should review before purchasing the home, can provide an overview of the financial condition of the HOA or co-op, including whether it has a reserve account for future large expenses and repairs.