The Difference Between an HOA and an Apartment Rental

Condominiums and Apartments may be structurally similar, but are fundamentally different.

A new owner moving into an HOA for the first time often brings with them expectations from their pre-homeowner life. This is understandable: life in a rental is procedurally simple.

Tenants write checks to the owner, whose responsibility it is to maintain the property. The owner (or management company) make executive decisions on every repair cost, vendor, paint color, carpet texture, and landscaping detail. Therefore, the renter’s responsibilities end when they make their monthly payment.

This is very different from the democratic framework of the Homeowner Association, where decisions are made by board consensus as representatives of the owners.

New owners, used to the simpler, sometimes quicker operation of apartment complexes, can find themselves surprised and even frustrated by this change in dynamic.

Things run slower.

Repairs are considered more deliberately.

Some HOAs choose to operate by a preventative maintenance philosophy, others chase repairs with more of a “deferred maintenance” mindset. When owners make a dues payment, which in spirit feels like a rent payment, it can be confusing to perceive a different result from past rental experiences.

Here are a few of the key differences between Apartments and HOAs:

Paying Bills in an HOA:

In a rental, tenants pay the owner, who pays all other major expenses directly.

On the other hand, in an HOA, board members review and pay invoices, are (generally) signers on all banking. The management company generally do not authorize any HOA payments or have power of the purse.

Banking:

HOAs generally maintain an operating and reserve banking account, and may have supplemental banking for things like investments or money markets. The signers on these accounts are the board of directors.

HOA Meetings:

HOA boards meet regularly in formalized, disclosed sessions which are generally open to owners. We encourage owners to attend these meetings as they are where most decisions are made. Most boards encourage owner attendance, input, and feedback.

Compliance:

This is one of the most sensitive areas of HOA life. In rental properties, leases normally include a set of rules, such as quiet hours and pet restrictions.

However, in an HOA, the rules and regulations are established in a formal “governing document” which applies equally to all owners. Non-compliance with the terms within these governing documents activate various consequences, ranging from warnings, fines, and more. Parameters vary between HOAs, but common regulated categories include paint colors, construction guidelines, pet waste, noise, vehicle size, cleanliness, and landscaping.

These rules help give the property consistency, curb appeal, and a more predictable atmosphere and quality of life than a rental property can provide.

Financials:

Rental properties have no reason to share the numbers with tenants. But HOAs maintain detailed financials on a monthly basis. Available to all owners, your HOA financials are your window into the ongoing fiscal story of your association. We encourage all new owners to learn the basics of HOA accounting so you can watch your money.

Operationally, HOAs tend to run “slower.” You can think of an HOA like a democracy: owners elect a board from within the ownership whose mission it is to “lead” the HOA.

Decisions are made by the volunteer board of directors (not the management company) who may meet monthly or with less frequency. The board alone make decisions on everything from repair expenses, financial choices, budgets, and more.

Billing:

Apartment: Tenants pay their rent per the terms of their lease to the property owner, whose responsibility it is to maintain the property.

HOA / Condominium: Community expenses are approved and paid by the board of directors.

As you can see, there are a lot of changes to adapt to when moving from rental properties into HOA ownership. While these changes can be overwhelming, it can also be empowering to have more control over your living space.