How To Form A Homeowners' Association

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Homeowner associations (HOAs) have become more and more prevalent. According to public policy professor Robert H. Nelson, condominiums, homeowners' associations and cooperatives "as recently as 1970 represented only about 1% of U.S. housing. By 2010, however, there were more than 300,000 community associations housing more than 60 million Americans, 20% of the U.S. population."

What does this mean for you? It means that if you're shopping for a home, you need to find out whether it's in an HOA. You need to understand what an HOA is and whether you can live with its rules.

HOAs manage issues that affect the entire community, such as safety and security, lack of property maintenance, local nuisances or the provision of services that aren't taken care of by the local government. HOAs also can be a source of major strife because of the power they wield over homeowners.

HOAs are generally formed by developers when a new community is constructed. As a condition of acquiring property in many communities, buyers must join the HOA. As a result, many people wind up joining HOAs without truly understanding what HOAs are or how they work, just because they fall in love with a particular home.

To learn about the intricacies of HOAs, read my new Investopedia article, How To Form A Homeowners' Association, about how HOAs are formed and run.

For even more information on homeowners' associations, check out 9 Things You Need To Know About Homeowners' Associations.

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