When you’re looking for a new home, one important thing to consider is whether or not the one you love is within the jurisdiction of a Home Owner’s Association (HOA). It’s estimated that about 25% of the US population lives in an area with some type of community association. In 2019, 60% of recently built single-family homes and 80% of houses in new subdivisions are governed by an HOA—33% in the Northeast, 50% in the Midwest and 75% in the West and the South.
Before you decide if an HOA is the right thing for your lifestyle and your bank account, you need to know the basics of how HOA management affects home ownership, both pro and con. In general:
- They make and enforce rules for residents of single-family homes in a subdivision, planned communities or condominium buildings.
- They are governed by a board of directors made up of and elected by residents or by a property management company hired by the members.
- Membership is required to buy a home in the HOA’s jurisdiction.
- Members pay dues or HOA fees that pay for maintenance and upkeep of common areas and facilities and for a reserve fund to cover emergency repairs.
- Most HOAs have a Declaration of Covenants, Conditions and Restrictions (CC&R).
No matter how many pages the CC&R is, you should become familiar with all the restrictions listed in it, because you will have to live by them or suffer penalties for violating the rules, such as fees, a lien on your house or litigation. Common restrictions include upkeep standards, changes to the structure, fences, landscaping and color of the home. A new home also may be restricted in architectural style and square footage.
Some homeowners love the benefits of an HOA, while others feel too restricted by the rules. Often the competence of the management or board of directors can determine the degree of satisfaction felt by residents. Before you buy, ask your real estate agent and will-be-neighbors about what they consider are the pros and cons of this particular association. Common pros and cons include:
- Restrictions help ensure a uniform appearance for all the properties in the zone, thus helping to maintain property value; HOA properties usually sell for an average of 4% more.
- Self-governance vs. control by a landlord is appealing to many home owners.
- Services can include landscaping and upkeep of common areas. They may include trash collection, snow removal, pest control, lawn maintenance, and trimming bushes & trees for individual properties. Totally maintenance-free living is more common in condominiums.
- Desirable amenities often include a swimming pool, tennis court, party spaces, fitness center and walking trails; planned activities such as block and pool parties may be included.
- Amenities and self-governance can make it easier to make new friends and feel a strong sense of community.
- If you have disagreements with a neighbor, the HOA acts as a mediator in assisting with conflict resolution.
- Home owners pay fees or dues to their HOA. These vary according to the property value and size and the services and amenities included, but they average $200 – $400 per month. They include money that goes into a reserve account for repairs. If major repairs exceed the amount held in reserve, members may receive an additional assessment to cover the cost.
- The amount of the fees could increase over time, depending on expenses.
- Fees cover upkeep on every unit in a condo community. You may want to handle repairs yourself or find someone cheaper to do it.
- Some of the regulations in the CC&R may seem excessive because, after all, it’s your property. It might be hard to swallow if you’re prevented from hanging a flag, putting up solar panels or changing the paint color on your house. Certain updates, like a deck or a new fence may also be regulated.
- Common violations that may seem picky but could result in a fine, might include:
- A garbage can in view or sports equipment left out after hours
- Fencing dimensions or styles that vary from the norm
- Grass that is allowed to grow too tall
- Window coverings that face the street and are not approved
- Having a pet or too many pets
- Holiday decorations that aren’t allowed
- A vegetable or flower garden that is in the “wrong place”
- The type and placement of security lights on your property
- Abandoned vehicles in the driveway or on the street
If you disagree with the regulations included in your CC&R, or if you think your HOA management is inept or unfair, you can always run for election to the board. At the very least, go to all the meetings. Get involved. It’s a good way to get to know your neighbors and have a say in how conflicts are managed.
The fine print
If he or she doesn’t already know, ask your real estate agent to investigate the financial status of the HOA and if there is any outstanding debt to the association, Find out how much money is held in reserve, and how often the HOA has increased dues and assessments or is allowed to do so. Ask some of the residents how they feel about management and what their pros and cons are. Don’t be caught unaware. You might love the amenities and services included in the HOA you will be joining, or you might decide to keep looking for another home that is more suitable to your lifestyle and budget.