When you’re in the market to purchase a home, the location, cost, and associated schools or services are probably top factors in your decision-making process. They should be, of course, because these factors will impact your day-to-day experience for as long as you choose to remain in your home.
However, if the neighborhood you choose is governed by a homeowners association (HOA), you’ll want to weigh a few more factors. There are HOA dues, additional regulations, and an additional layer of legal considerations involved with homeownership.
First, let’s take a look at what a homeowners association is and how it functions on behalf of the community it governs.
A homeowners association consists of all the homeowners whose properties are located within the bounds of the HOA. A board of volunteers from within this group of homeowners runs the HOA, overseeing services like trash removal, snow clearing and the care and maintenance of community common areas.
An HOA is additionally charged with enforcing the rules that the community’s homeowners have agreed to follow.
Usually, HOAs operate in planned communities that have been built by a single developer who agrees to form the HOA to help the city or county approve their plans for the new community. Providing the basic infrastructure for the community reduces the strain on the local government.
Is an HOA right for you?
According to recent figures reported by The Community Associations Institute, nearly 70 million people in the USA are living in HOA-governed communities, whether they’re living in single-family homes, condominiums, or townhomes. Clearly many Americans prefer the convenience and quiet most HOAs deliver.
Because HOAs are inherently nonprofit, they’re always run and operated by a rotating board of resident volunteers. If you choose to join an HOA community, you may want to consider that participating in this effort could present an opportunity to form ties to your community. Since higher levels of community involvement are associated with a reduced risk of depression and loneliness, having this network available to you from the outset in your new home may be beneficial to your overall sense of wellbeing.
If you’re ready to consider purchasing a home that’s governed by an HOA, let’s look at the pros and cons that you may want to analyze.
While the community services and preservation of neighborhood curb appeal are sure to boost the value of your home, you’ll also be required to follow a strict list of rules and regulations that may ultimately detract from your sense of independence as a homeowner. How much this matters to you will partially come down to your personality and the personality of members of your HOA board, but the following three tips will help you decide whether a specific HOA is the right one for you.
1.) Read the HOA declaration carefully, but understand that it may change.
The HOA declaration can be understood as being a charter or constitution for the community it governs. It is created at the founding of the HOA and is usually initially written by the developer.
Down the line, though, the HOA is entirely turned over to the homeowners themselves, who are thereafter represented by an elected board of volunteers. This board is permitted to discuss and suggest changes to the declaration, present the annual HOA budget, and choose the vendors who are hired to complete work within the community.
While this sounds good, and it often is, you must know that if your home is part of an HOA, they are bound to the HOA forever.
If the rules of your HOA change in the future, you’ll be required to abide by them whether you think they’re reasonable or not. Simple changes like adding a shed—even in your backyard—or painting your door red to distinguish it from the long sea of blue front doors will have to be in compliance with the HOA.
If being governed by a strict set of rules like this will add to your peace of mind and help you feel secure in your investment (after all, you know that things will be tidy and orderly), an HOA may be perfect for you.
On the other hand, if you dislike following rules and are drawn to homeownership because you’re a DIY enthusiast who dreams of creating a unique home that reflects your personality, an HOA is likely to leave you frustrated and disappointed.
2.) Factor in the monthly HOA fees.
The cost of monthly HOA fees varies by a staggering degree. Sometimes they are as low as $50, but in upscale communities, they can be in excess of $1,000.
Now, perhaps your HOA dues only cover your waste removal and street cleaning, in which case you’re paying for these services no matter where you ultimately buy a home.
In some communities, though, the HOA has decided that the cost of community amenities like parties, gardens, parks, or tennis courts are worth the additional investment. You’ll be required to pay these fees whether or not you intend to take advantage of the additional amenities.
You won’t be able to withhold payment from your HOA, even if you disagree with their use of your money. Were you to attempt to do so, you would encounter a long list of legal and financial issues, up to and including a lien on your home that would prevent you from selling it.
3.) Find out the extent of the HOA’s legal power.
Most states have clear laws that restrict the legal power of the HOA, so it’s a good idea to learn exactly what the rules are where you live. Ultimately, you’ll probably decide that it’s much easier to work WITH your HOA to enact changes rather than attempt to propose changes to legislation, so try to decide whether or not this HOA is right for you based on the way the laws are written now.
While 65% of people living under an HOA say they’re having a positive experience, that still leaves a significant 35% who aren’t crazy about their HOA. Following the three steps we’ve outlined will help you find a community that will meet your needs and help you join the majority of homeowners who are happy with their HOA!