The Homeowners Association: Pros and Cons of HOAs

It’s always a top consideration when buying a home: HOA, or no HOA? Homeowners Associations offer many benefits to homeowners, but they also come with some downfalls. Here, we look at reasons to embrace – or avoid – a neighborhood HOA.

What is a Homeowners Association?

Simply stated, a Homeowners Association, or HOA, is a group run by a board of community members that ensures a particular neighborhood looks well-kept and functions smoothly. HOAs are often responsible for maintenance of common areas, community pools and clubhouses, neighborhood parks and playgrounds, and community-building events like monthly socials, holiday decorating awards, and block parties. Being part of an HOA will require a monthly fee, which ranges greatly depending on the amenities offered by the organization.

Pros of  Homeowners Association Communities

An estimated 24% of all homeowners now live in an HOA-controlled community, and with good reason. Though they get a bad rap, HOAs have some important benefits.

• An orderly appearance
  

  Each HOA has rules in place to keep the neighborhood looking nice. The HOA’s covenants, conditions, and restrictions (CC&Rs) outline precisely what homeowners can and cannot do to their properties. Home improvements like paint colors, additions, and other construction projects must first be approved by the board. The intent is to keep the neighborhood looking like it did initially – and preventing neighbors from painting their homes ghastly colors.

• Common space maintenance

  The HOA keeps up all common areas like walking paths, playgrounds, parks, and fields. They’ll also make sure the entrance to the neighborhood looks inviting, with attractive landscaping and signage.

• Neighborhood amenities
  

  Not all communities feature neighborhood amenities, but those that do likely rely on HOA fees to keep everything in top shape. Some HOA communities have a neighborhood pool, clubhouse, or even a community golf course that is maintained and operated using HOA fees.

• Rule enforcement
  

  Are you tired of your neighbor’s lawn looking like a jungle? Is the dog next door barking at all hours of the night? Does that family down the street constantly have a car blocking the sidewalk? It’s no longer up to you to point out unsightly or annoying grievances. Instead, the HOA takes on that responsibility, allowing neighbors to remain friendly.

• HOAs increase property values
  

  Curb appeal leads to higher sale prices. But it’s not just about the way your home looks. If the neighborhood as a whole looks unkempt and run down, your home – no matter how immaculate its condition – won’t be worth as much. HOAs keep the entire community maintained and orderly, drastically increasing property values for all homeowners.

Cons of HOAs

Living in an HOA-controlled community comes at a cost – and it’s not just financial.

• Steep homeowners association fees
  

  All the amenities and services come at a cost – and sometimes it can be outrageous. Fees vary depending on geographic location, house size, and community amenities. Some multi-family communities pay hundreds of dollars a month in fees, which cover costs like roof repairs, siding, and landscaping. Other neighborhoods pay $20 per month but don’t have access to amenities like a pool or lawn maintenance. Each HOA is different, so do your research before buying a home in a covenant-controlled community. Note: Failure to pay fees can result in a lien against your property.

• Inability to customize your home
  

  Want to build a second story to your ranch? Or paint your house your favorite color green? Not so fast! Each improvement must be approved by the HOA board, and sometimes that can be a hassle. You’ll need to submit detailed plans to the HOA board well in advance of your project, and if your submission is denied, you don’t have much recourse.

• Limited rental opportunities
  

  Some HOAs limit the number of rental units allowed in a neighborhood. Investors should know the HOA regulations before purchasing an investment property to prevent potential financial losses.

• Rising fees and surprise assessments
  

  Local homeowners associations can raise fees at any time, with little notice. HOAs can also impose special assessments to cover costs not included in monthly fees, like special construction projects for the community. As a homeowner, you don’t have an option: you must pay the fees and the assessments or face penalties.

Ready to Move?

If you’re ready to buy or sell your home, check with a trusted local Realtor who can give you more information about HOA fees in your area. Read all HOA documents carefully before purchasing a home to ensure you fully understand the costs.