Homeowners Associations: The Good, The Bad, and The Ugly
You’ve been happily house hunting when you happen upon a home that checks off all your major boxes. You’re elated at the prospect of making an offer, reaching an agreement, and possibly closing on what’s sure to be a dream come true when, suddenly, you find out that the property is part of a homeowners association. Depending on your understanding of home owners associations and past experiences, you may be overjoyed, disappointed, or wondering just what the heck a homeowners association is anyway.
Fear not, reader. Today, we’re diving into HOAs and sharing everything you need to know about what they are, what makes them great, what makes them a pain, and whether or not they may be right for you. Read on for more!
What are Homeowners Associations?
A homeowners association, often abbreviated as HOA, is an organization that serves as an authority of sorts within a community, condominium complex, or other subdivision.
HOAs oversee certain operational aspects of the community, agree upon and enforce rules that are intended to benefit the community as a whole, and ensure community standards are upheld. They also require fees from all property owners within the community and are responsible for collecting these dues regularly.
How Do Homeowners Associations Work?
Most homeowners associations are exclusively composed of the community’s residents and governed by an elected board of directors. The board enforces the community rules and often requires new residents to become HOA members if they are to purchase property within the community.
The rules are typically outlined in an official document called the Declaration of Covenants, Conditions, and Restrictions, often abbreviated as a CC&R. CC&Rs are legally-binding and may subject homeowners that fail to abide by its rules to fines and other consequences.
In some states, violating the rules of an HOA can even get you evicted, so it’s prudent to be aware and compliant with any and all HOA policies if you purchase property governed by a homeowners association.
The Pros of HOAs
Some people feel like living in a community with an HOA is too restrictive, but there are some perks that come along with homeowners associations.
They Uphold Standards for the Community
If you’re the type that prefers to live in an orderly environment where neighbors must behave, well, neighborly, a homeowners association may have your back big time at making that dream come true.
HOAs outline standards for how neighbors should respect one another, maintain a peaceful environment that everyone can reasonably enjoy, standards for cleanliness, and rules for what kinds of maintenance is permitted, how the work should be done, and when it is permitted.
For people who prefer these clear parameters and everyone in the community on the same page, an HOA is a godsend.
They Serve as an Intermediary
Suppose you do have an issue with a neighbor within the community. Most people outside of HOA-governed communities get the unfortunate ordeal of broaching the topic with their neighbor, hoping the concern is well-received, and waiting to see if their neighbor will take it seriously and address the problem behavior.
For example, if you keep hearing that yappy dog down the block all day and night, you’ll need to head over, ring the bell, hope the conversation doesn’t get heated, and wait to see an improvement. It’s not great, but it’s that or calling the cops, right?
Not if you live in a community with a homeowners association. If you have an HOA with clear rules about noise and disturbances, you can air your grievance to the HOA and let them deal with your neighbor. If your neighbor fails to comply with the neighborhood rules, your HOA will impose a fine or other consequence to motivate them further.
They Offer Amenities
Not every community offers amenities, but some communities and buildings with an HOA at the helm offer their residents amenities such as fitness centers, pools, lounges, playing fields, tennis and basketball courts, and more.
Instead of having to head into town for these convenient features, you just have to walk down the block to enjoy free (well, sort of free) use of the facilities. Sometimes it’ll feel a little like you’ve moved into a five-star resort!
They Provide Services
The homeowners association will also provide and oversee the upkeep of many neighborhood and building common areas. Unpopular chores like shoveling snow and raking leaves may be totally taken care of by the grounds crew, hired contractors, or other staff that takes the burden of these things out of your hands.
For people who prefer to be pampered, it’s a dream come true.
The Cons of HOAs
With so much good that HOAs do for a community, why wouldn’t everyone want to live in a community with a homeowners association? We can think of a few reasons.
They Charge Dues
Buying a home is already pretty costly, so it’s hard to justify added fees on top of your mortgage premium, interest, and property taxes. Some communities charge as little as $100 annually, making the fees fairly negligible, but some affluent locales may ask for upwards of $1,000 per month. That may be a dealbreaker depending on your budget.
The good news is that these fees do contribute to neighborhood upkeep, amenities, and other services that make the community a great place to live, but whether or not the fees are reasonable is a personal question that only you can answer based on your personal sensibilities.
They Can Impose Assessments
If the dues aren’t enough of a deterrent, HOAs reserve the right to impose assessments on their residents. That means that, if the neighborhood or community experiences greater operational costs than expected and the HOA needs money to make ends meet, they can impose a one-time charge on all residents to cover the cost.
Many HOAs are underfunded, meaning assessments are not too uncommon. For those with a strong savings reserve, it may not matter much, but an unexpected assessment may be devastating to homeowners who are already stretching their budget thin.
They Restrict Your Freedom
As we touched on earlier, communities without HOAs may, at times, feel a bit like the wild, wild West, but that’s perfect for some people.
Some people prefer home ownership to renting because they finally get to shed the landlord and lease agreement in exchange for a little something to call their own. They retain the final say on what they’re going to do with their property so long as they’re not breaking any local laws or ordinances.
For people that love some space to spread their wings and truly come into their own, living under an HOA feels too much like dorm living. Despite all the good a homeowners association can do, it’s an immediate deal breaker for this type of person.
They Can Foreclose On You
Let’s say you do decide to buy a home with a homeowners association, but you overestimated your financial strength, exhausted your savings, and now you’re having a hard time making ends meet and falling behind on your HOA dues.
There are state laws that may protect you from serious ramifications depending where you live, but, in some states, the HOA can foreclose on you for failing to pay your dues. This is a major downside, but not too unlike falling behind on your mortgage payments which will invoke the same consequence. So, it’s a dire consequence, but not entirely unique to communities with homeowners associations.
Should You Live in a Community With an HOA?
Unfortunately, there’s no quick and easy way to determine if you’ll be happy living in a community that has a homeowners association. Each community and HOA is different, despite the overarching similarities in how they operate, so it comes down to your personal sensibilities, perspectives, and beliefs.
People who like for a group of like-minded individuals to strive to keep order in the neighborhood will feel at ease knowing that someone is looking out for their best interests. Sure, the privilege comes with a cost, but nothing in life is free, the pros are well worth the expense, and there may even be amenities available to sweeten the pot.
On the other hand, people who prefer to keep their hard-earned money for disposable income, investments, and savings may resent an HOA sticking their hands in their pockets, even if it is in the name of providing services and upholding rules. In fact, some people will seriously scoff at the HOA’s role as a neighborhood enforcer, preferring a more “laissez-faire” environment where they get more freedoms and less financial obligations.
It all boils down to whether or not the homeowners association has created a structure to the community that appeals to you and if you feel your money will go to good use. If you’re not totally sold on how the HOA operates or don’t believe in needing one in the first place, you will likely be happier elsewhere.
Final Thoughts
Homeowners associations are polarizing in many ways, but, regardless of how you may feel about them, they are quite popular in today’s society. There are currently over 370,000 HOAs in the United States and nearly 30 million homes governed by them.
Deciding if buying a property within an HOA-controlled community is right for you is a personal question that requires much thought. Hopefully, our list of pros and cons will help make that decision a little easier for you, so you can determine if you’re going to wind up in your dream home or living an HOA-fueled nightmare.
Don’t be afraid to broach the topic with your agent during the buying process. Your local real estate professionals are well-versed in HOAs and often have insider insight that’ll help you make the best decision possible.
Contact us today to find out more!
