If you are looking for a home, you will find that many houses are located in an estate or neighborhood with a homeowners association (HOA). A homeowners association is a board of community residents who serve to make sure the neighborhood runs smoothly and meets certain standards in terms of functioning and appearance.
These HOAs have many advantages and disadvantages for homeowners, although not all homeowners define them in quite the same way. For example, some homeowners are fine following HOA rules but resent paying fees, while other do not mind the fees because of the benefits they provide but resent being told how they can and cannot live in their own homes.
To determine how suitable living in a community with an HOA might be for you, it can be useful to break down HOAs into the individual pros and cons of HOA fees and rules. For most homeowners, an HOA is a trade-off. The question for you is whether or not the trade-off is worthwhile. Read on to learn the benefits and drawbacks of HOAs.
Homeowners associations (HOAs) typically charge fees for membership. In exchange for those fees, HOAs handle maintenance of the community’s common areas and provide certain amenities to residents. This may include roads and walking paths, trees and park areas, pools and clubhouses or other features of a neighborhood.
Pros of HOA Fees:
- HOA fees tend to apply toward neighborhood amenities. When you move into a community with an HOA, it means you may have access to features private to community residents like a fitness center, pool, child care or a lake.
- You can often have your fee folded into your monthly mortgage payment.
- Fees pay for services like road and landscaping.
Cons of HOA Fees:
- HOA fees, or dues, can run between $100 per year to more than $1,000 per month, depending on the location.
- The fees are mandatory. You cannot buy a home in an area with an HOA unless you agree to pay the fees.
- Since the HOA dues are often folded into your mortgage, the extra cost can influence your eligibility for mortgage approval. Your credit score may be even more important, with the added charge of an HOA bumping up either the size of the loan or your income-to-debt ratio.
- You must pay your HOA dues even if you do not use the facilities they pay for. Perhaps your dues pay to maintain a pool and clubhouse, for example. Even if you never use the pool or clubhouse, you still need to pay the same HOA dues as your fellow community members who do use these amenities.
Homeowners associations (HOAs) often have rules for their members called covenants, conditions and restrictions (CC&Rs). These rules help to maintain uniformity in the way the homes and yards in the community are kept. Such rules may include maintenance requirements for your lawn, the colors you are permitted to paint your house, the number of types of pets you can have, the places you can park your car, the dates and times you are allowed to water your lawn and much more.
Pros of HOA Rules:
- HOA rules are usually designed to keep a neighborhood clean and free of crime. As a result, you do not have to worry about your neighbors making your neighborhood into an eyesore.
- CC&Rs help make sure property values do not needlessly decline in a neighborhood.
- Having HOA rules is optional. Homeowners associations are made up of homeowners. If those homeowners decide as a community not to have HOA rules, there are none.
Cons of HOA Rules:
- The rules are not negotiable. You must agree to them in order to buy a home in the area, and if you break the rules, there could be fines or other penalties you have already agreed to when you sign a lease or a buy a house in the neighborhood.
- Even approved activity can sometimes take extra effort. Even if a renovation you make on your home is allowed by your HOA’s CC&Rs, there still might be extra red tape involved in meeting those rules you would not have to deal with if making those renovations on your own. For example, you may need to submit plans to your HOA for approval before you can schedule any work on your house. Those plans may need to detail specifics like the shape, location, colors, height and materials involved. The HOA then has the power to reject any aspect or all of your plan and send you back to the drawing board. Meeting CC&Rs could easily delay a home renovation project and should be accounted for in the planning of one.
- In the most extreme circumstances, an HOA is empowered to evict a tenant of a home and hold the homeowner responsible for any damages or other liability of the tenant. If the tenant is the homeowner and he or she is far enough behind on paying HOA dues, then the HOA can take him or her to court and force the home into foreclosure.
- Unfortunately, some HOAs suffer from a lot of internal politics, and they may impose burdensome restrictions on residents while making it difficult to get projects approved.
Other Pros and Cons of HOAs
Beyond fees and rules, there are a few other benefits and drawbacks to HOAs to be aware of. One significant pro is an HOA can act as a mediator on your behalf when you have a problem or dispute with a neighbor. If you see a neighbor violating one of the CC&Rs, you can simply report the neighbor to the HOA, and the HOA will take care of it. If your neighbors are violating noise ordinances, for example, the HOA is responsible for contacting the neighbor while leaving you out of it.
A significant con of HOAs is they are always made up of people, many of whom have no training in management and allow their subjectivity to affect the rules they impose on others. These associates are often influenced by the personalities and preferences of the representatives on the board and the neighbor-members who vote on issues. You must consider your own personality and character and those of the neighbors who may be on the HOA board in deciding how much you could bear the influence of a prospective home’s HOA.