Homeowner’s Associations (HOAs) are the governing bodies in planned developments. They make and enforce rules for the community and are given the authority to enforce the Covenants, Conditions & Restrictions. HOA documents are legal contracts – binding documents. By purchasing a home in the community, you are agreeing to live per the established regulations because membership is mandatory for residents living within the community regardless of whether or not you take advantage of the amenities.
Some view HOAs as expensive and restrictive. Often times, though, those regulations provide some level of protection to the value of your property. While we most often hear the random horror stories, many people are perfectly satisfied with their HOAs.
The HOA monthly or annual fees are what first come to mind for many. Living in a community with an HOA can be expensive and the more upscale and numerous the amenities, the higher the HOA fees. Part of the regular fees are placed into a reserve that pays for improvements or unexpected repairs. However, if there are not sufficient reserves, an HOA can charge extra assessments to pay for things. And because membership is not optional, an HOA can put a lien (actually force a foreclosure) for failure to pay association fees.
The fees do cover the maintenance of common areas like playgrounds, pools and tennis courts. Entryway landscaping and parks are also taken care of with these monies. In some community, HOA fees may even cover road maintenance, snow removal and trash collection. So, while the thought of an extra monthly expense might be difficult, the shared costs do provide benefits.
Amenities such as a fitness center, tennis and basketball courts, pool, or clubhouse are one of the main reasons people seek out a home in an HOA community. Even if you don’t personally utilize the amenities, they will always be a helpful selling point down the road.
And speaking of reselling, HOAs protect and, often, increase home values. The Covenants, Conditions & Restrictions will specify no ghastly house colors will be allowed, no auto junkyards, overgrown lawns or other things that would keep you from being able to sell your home. The regulations help maintain a certain level of quality throughout the neighborhood.
That being said, restrictions can be…restrictive. HOAs can control the type of pets or number of pets each household may have. The regulations can tell you how long before and after a holiday you may have outside decorations displayed. Many HOA agreements cover rules for the parking of vehicles, such as RVs or boats, a timeframe within which your trash bins need to be moved off the street, and expectations for regular lawn care. Projects like sheds and fencings have to go through an approval process that can be long and drawn out and, sometimes, approval for a project is denied.
Another advantage of a community with an HOA is the built-in mediation for any neighbor-to-neighbor difficulties that arise. It also provides a venue through which you can meet and get to know others in your neighborhood. A sense of community can be built through annual gatherings, a community website, new homeowner orientation, and other social activities.
While the occasional story of sophomoric behaviors, power hungry people, or people who hold grudges surface when the topic of HOAs comes up, that isn’t necessarily the norm. If you are concerned about the potential for ridiculous politics, sit in on an HOA meeting before you buy to get a feel for the culture and climate.
You should always read the Covenants, Conditions & Restrictions prior to purchasing a home – fully and carefully. These agreements are often available online or can be obtained through your realtor. It is important not only for understanding whether or not you can live with the established guidelines but also for ascertaining whether or not the property you are considering buying is currently in compliance with the HOA regulations. As the new homeowner it would be your responsibility to bring the property into compliance.
You should also understand how often fees increase. Ask for trend data from the last several years for both the annual fees as well as any special assessments that have occurred. It is also helpful to ask if there are currently any plans for future special assessments.
Should you decide to purchase in an HOA community, you should take advantage of the opportunity you have to participate in the decision-making process. Attend meetings so important decisions aren’t made by a small group of people that isn’t necessarily representative of the community as a whole. Serving on an HOA or at least regularly attending meetings gives you better ability to protect your investment.
Buying a new home brings both exciting times and challenges whether you purchase in a planned development or a non-HOA community. Either way, I look forward to helping you navigate the process of finding your next home – contact me today!