What is the homeowner Association ( HOA ) in Real Estate terms?

A Homeowners Association (HOA) is an organization established within certain housing communities, such as subdivisions, planned communities, or condominium complexes. Its primary role is to create and enforce regulations for the properties and their residents. Property owners within these areas automatically become members of the HOA and are obligated to pay dues, commonly referred to as HOA fees. The level of restriction imposed by an HOA can vary—some may enforce strict guidelines on property use, while others might allow more personal discretion.

Homeowners associations (HOAs) are commonly established within single-family home communities or in multi-unit residential areas, such as townhomes or condominiums. The primary role of an HOA is to develop and enforce community regulations to maintain property standards and overall community aesthetics.

Homeowner Association (HOA) Fees

Some HOAs can wield significant financial and legal power over the property owners in their zone. HOAs collect monthly or annual HOA fees. These fees depend on a number of factors, including:

• Type of property
• Number of properties in the group
• Location
• Amenities offered
• Operating expenses

In this region, the cost of building management and maintenance varies depending on the age of the building. For newly constructed buildings, the price is approximately €0.9 per square meter. In contrast, older residential buildings may incur lower costs.

The fee structure is detailed as follows:

• Building Manager/HOA Company Fee: Typically around €3 per apartment.
• Ongoing Maintenance: Generally slightly higher, approximately €5 per apartment.
• Cleaning Services: About €3 per apartment.

These figures represent the average costs associated with the professional management and upkeep of residential buildings in the area.

Services of the HOA Management Company or Building Manager:

This includes the professional management and administrative services provided by the HOA management company or the building manager to efficiently run the community.

• Ongoing Maintenance of the Building:

Regular maintenance activities such as cleaning, plumbing, carpentry, and other necessary repairs to keep the building in optimal condition are covered under this cost.

• Investment Fund for the Building:

Contributions to this fund are used for significant repairs and upgrades, ensuring the building remains modern and well-equipped to meet future needs.

These fees are essential for the continuous upkeep and enhancement of the property, contributing to a well-maintained and functional living environment for all residents.

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How old is this type of business in the SEE region?

In the Balkan region, particularly since 2018, the role of professional building management companies and professional building managers has become increasingly prominent.

This shift occurred when regulations were introduced mandating that residential buildings that do not appoint a resident manager must engage a professional management service. Here is how professional building management is regulated and the processes involved:

Licensing Process:

Professional building managers in Belgrade, and potentially other areas, are required to obtain a license through a comprehensive procedure that includes passing two state exams. These exams cover a broad range of knowledge necessary for effectively managing a building. Topics include operational management, financial handling, safety protocols, investment strategies, and more.

Legal Framework and Duties:

Under the Law on Housing and Building Maintenance in Serbia, a professional building manager acts as the legal representative of the building. Their responsibilities include a lot of tasks from finance to maintenance and you can read more about the laws of housing in each country or somewhere even the city.

What does the HOA look like and work in the USA? Which will probably come to SEE sometime soon.

Structure and Function of HOAs in the USA

Establishment and Purpose:

HOAs are typically established by real estate developers to manage and maintain a community of homes which can include single-family homes, condominiums, or townhouses.

The primary purpose is to maintain the quality and value of the properties within the community by enforcing rules and maintaining common areas.

Governance:

HOAs are governed by a board of directors elected by the community residents. This board makes decisions regarding the community’s management, including rule enforcement, budgeting, and community improvements.

The board operates under the guidelines set forth in the HOA’s governing documents, which include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), bylaws, and other rules.

Fees and Dues:

Homeowners are required to pay dues or fees that fund the maintenance of common areas, community amenities, and sometimes certain utilities.

Fees can vary widely depending on the amenities provided and the costs of maintaining the property.

Rules and Regulations:

HOAs enforce rules that may dictate architectural guidelines, property maintenance standards, and usage of common areas.

These rules are meant to ensure a uniform and orderly appearance of the community and to prevent activities that could disrupt the neighborhood’s tranquility or decrease property values.

Legal Authority:

HOAs have the authority to impose fines and enforce restrictions through legal means if necessary. This can include placing liens on properties for unpaid dues or fees.

Potential Adoption in Southeast Europe and Expectations for Europe

As the concept of HOAs becomes more familiar in SEE, the following aspects can be anticipated:

Cultural Adaptation:

The adoption of HOA-like structures will need to consider local cultural, legal, and economic conditions. Regulations and structures may need to be adapted to fit the specific needs and expectations of European residents.

Regulatory Framework:

Comprehensive legal frameworks will likely need to be developed to define the powers and limits of HOAs in European countries, mirroring some aspects of the American system but also addressing unique local issues.

Community Response:

Acceptance may vary, as the concept imposes a collective decision-making process and financial commitments that might be new to some homeowners.

Economic Impact:

HOAs could potentially increase property values by ensuring well-maintained and cohesive community environments. However, the additional costs in the form of regular dues may require justification through visible improvements and benefits.

Implementation Challenges:

Initial setup, especially in older communities that are not accustomed to such structured management, might face challenges. Implementation would require careful planning, clear communication, and possibly phased approaches.

Adopting the HOA model in SEE and other parts of Europe would involve significant adjustment and education to align with local realities while striving to replicate the benefits seen in the U.S.

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