Buying a property that’s part of an HOA has its benefits and pitfalls. Be prepared for what you’re getting yourself into by educating yourself on what HOAs entail.
Homeowner Associations (HOA) can be a blessing or a curse depending on your lifestyle. If you’re a young professional who loves the ease and convenience of condo living and doesn’t mind the added costs or an empty nester looking to downsize and reduce your home maintenance responsibilities, it can provide the perfect lifestyle for you. On the other hand, if you don’t want to adhere to HOA bylaws and want the freedom to make any changes to your house that you like, an HOA can be your biggest nemesis.
If you decide to purchase a home that’s part of an HOA, you should be prepared. Know what to expect by educating yourself on the benefits and disadvantages of HOAs.
What is a homeowner association?
A homeowner association is a legal entity that manages shared space. This shared space can be a condo’s roof, garden, and hallways, a townhome’s lawn and clubhouse, or a housing development’s playground and swimming pool. The association collects money each month in the form of HOA dues.
If you’re part of an HOA, assume that everything within the walls of your home is your responsibility. For townhomes and detached homes, your exterior and yard are also your responsibility. Aside from what is solely your responsibility, everything that is held in common, such as lawns and lobbies, are the responsibility of the HOA.
If you move into a property with an HOA, you are required to join the HOA and pay the monthly or annual fees.
HOA Fees
HOA fees vary from association to association. It depends upon what the fees cover and how upscale the community is. Some are as low as $100 a year and cover only basic street cleaning or street maintenance. Others can run in the thousands per month and cover luxury amenities such as concierge service and valet parking.
Typical HOA dues that fall somewhere in the middle of those two extremes help to pay for the upkeep of the common areas, which can include:
- Roofing issues
- Landscaping
- Snow removal
- Leaf blowing
- Shared fencing
- Shared mailbox facilities
- Entryways
- Security
- Swimming pool maintenance
- Tennis court maintenance
- Playground maintenance
- Septic system maintenance
- Property insurance for common areas
- Liability insurance for common areas
- Shared garage facilities
- Clubhouse
- Fitness facilities
- Elevators
- Sidewalks
- Parking lots or roads
- Building exteriors
- HOA reserves in case of unexpected costs
In addition to monthly or yearly dues, you may also periodically be charged with an extra assessment. Assessments are charged when a major renovation is needed and there are not enough funds in reserve to cover it. For instance, perhaps a new roof is needed or an elevator needs to be repaired to bring it up to code.
Dues are known upfront; you can find out what HOA dues are per year. However, assessments are not known upfront and can cost as much as several thousand dollars.
Rules and Regulations
HOAs do more than maintain common areas. They also create rules, also known as covenants, conditions, and restrictions (CC&Rs) that residents must abide by. Depending upon the HOA and the type of residence, HOA rules can include:
- What color your exterior can be
- What color your front door can be
- Whether you can have a clothesline
- Whether you can have a satellite dish
- The size and type of pets you may have
- What type of landscaping you may do
- Whether RVs or other non-traditional vehicles are allowed to be parked in your yard
- Fencing restrictions
- Window coverings for windows facing the street
- Flying flags
- Keeping your garage door open during the day
- How high your grass can be before having to mow
HOAs are known for being strict about the rules. Since rules and regulations vary by association, it’s important that you carefully review the CC&Rs before you buy an HOA property.
Is an HOA property right for you?
Before deciding to buy a home with an HOA, you should do your homework. Here are some important things to consider before buying.
- Know the HOA bylaws: Look up the rules of the HOA; most are now available online. Be sure that you understand the rules and the penalties for not following the rules. If you can’t find this information, ask your real estate agent to get it for you. Note that some HOAs have the ability to foreclose on your home if you do not pay the HOA dues, violation penalties, or assessments.
- Check for compliance: Be sure the home you want to buy is currently in compliance with the rules. If it isn’t, you will have immediate work when you move in to ensure it complies.
- Check the fees: Find out what the current fees are and what they have been over the past 10 years. This will help you assess their stability. Be sure to ask what the fees cover. You will want to know if the fees cover trash pickup, water, and cable, or whether you have to pay these bills separately. Once you understand the current fees, ask them about their process to determine how and when to raise the fees.
- Ask about the reserve fund: This is the fund that is held to fix large issues. If the fund is too small, homeowners will have to pay an assessment to fix the issue. Be sure to ask to see assessments made over the past 10 years and check if there are any assessments planned for the near future.
- Confirm the amenities: When you pay your HOA dues, you are paying for the amenities whether you use them or not. Look carefully at the amenities offered and determine if they meet your needs. Does the schedule for the fitness room fit your work schedule? Are the pool hours good for you? Can you bring guests or have pool parties?
- Go to an HOA meeting: If there is a lot of drama or infighting involved in the meeting, the HOA may not be right for you. See how they resolve issues.
- Think about your personality: Finally, think about yourself and your lifestyle. If the community doesn’t seem like a good fit, or you simply don’t like others telling you what you can and can’t do on your own property, this HOA home might not be for you.
Benefits of Living in an HOA Community
Although some people don’t like to live with an HOA, there are many benefits to doing so. The first is that your community will look nice. Since the HOA sets standards, you can rest assured that your neighbor will have nice landscaping and junk won’t be sitting in their front yard. This is great for the resale value of your home. Another benefit to HOA living, especially if you live in a condo or townhome, is low maintenance. Someone else will be responsible for trash pickup and shoveling the snow. You don’t have to worry about keeping up the appearances of the outdoor areas.
Most people love an HOA for their amenities since most homeowners can’t afford their own pool and don’t have space for their own home gym. Buying into an HOA community with amenities can make a lot of sense for your lifestyle. Finally, an HOA is a great go-between when you have an issue with a neighbor. Rather than confront your neighbor about their loud party, barking dog, or unkempt yard, you can take the complaint to your HOA and let them mediate the problem.
