Homebuyers Guide Homeownership

HOAs: What You Need to Know

If you’re considering buying a home in a multi-family community, or even in a single-family neighborhood or master-planned community, you may become a member of a homeowners association (HOA) as part of the purchase.

If so, it’s important to understand what an HOA is, what fees you may have to pay, and what rules and regulations you may have to follow.

What is an HOA?

One of the many acronyms that come up during the homebuying process, a homeowners association (HOA) is an organization that governs multi-family complexes, such as condominiums and townhomes.

People who purchase units within these properties automatically become members of the HOA and must pay fees and follow the rules of the community.

Single-family home communities in planned communities can also have HOAs. People who purchase units within these properties automatically become members of the HOA and must pay fees and follow the rules of the community.

HOAs typically have boards of directors or governors, which are composed of residents who are elected to their positions and are responsible for overseeing and enforcing rules and regulations of the community and budgets.

An HOA’s rules are usually included in a document called the Declaration of Covenants, Conditions and Restrictions (CC&Rs), which set certain conditions on owners and their properties.

Rules vary widely among communities, but some common ones are the types of landscaping or fencing allowed and the color homes can be painted (for single-family homes). For multi-family dwellings, rules may involve pets, parking, hours of operation for community amenities, and outdoor grills. HOAs may impose fines and even liens on noncompliant homeowners.

An HOA is different from a property owners association (POA), which is an organization of people who want to improve their communities and real estate values. POAs are typically made up of homeowners who live in the community, but may also include small business owners and others with an interest in the real estate within their zone.

The Pros and Cons of an HOA

Arial view of houses
Pros and cons of living in an HOA / Photo by m16brooks / Shutterstock.com

Buying a property with an HOA in place has benefits. Since the purpose of an HOA is to preserve property values, owners must follow rules related to issues such as cleanliness, and maintenance of the community as a whole. In most communities, those who don’t follow the rules are subject to fines or other types of enforcement.

Since HOA board members are also residents, they are impacted by what happens to the community and have a shared interest in its upkeep.

Another benefit is access to community amenities, such as swimming pools, tennis courts, clubhouses, and fitness centers. You can enjoy these areas without having to maintain them yourself. Since HOA board members are also residents, they are impacted by what happens to the community and have a shared interest in its upkeep.

There are downsides to having an HOA. First, in some complexes, the association fees can be high or may include access to amenities that you aren’t interested in and don’t want to pay for. You must pay the full fee; you can’t opt-out of paying for some services.

Also, some HOA rules and regulations may be too restrictive for you. For instance, under the rules of an HOA, you may have to paint your home a particular color, which you may not like. Lastly, since HOA board members are volunteers, they may not have the skills necessary to effectively manage a property.

Issues related to an HOA, particularly financial ones, can become contentious among residents and addressing them can be difficult.

Understanding HOA Fees

One of the most important aspects of HOAs is understanding the fees that you will be responsible for paying and what services those fees include. Typical HOA fees are between $200 to $400 per month, but they could range anywhere from less than $100 to upwards of $10,000 for high-end communities.

Fees pay for services related to the upkeep of the community, such as sewer and water service, trash collection, and snow removal. With a condo complex, it’s common for fees to cover expenses related to roof maintenance and insurance that covers the exterior of the property in the event of a storm or other natural occurrence.

Fees also typically pay for maintenance of amenities, such as swimming pools and fitness centers. It’s important to get a detailed list of what fees cover prior to buying so you know what your monthly costs will be.

Another important aspect of understanding fees is knowing how much of your fees will be placed in a reserve fund, which is money set aside for major renovation projects or emergency use. Without adequate reserves, HOAs can also impose special assessments when they lack enough money to pay for unexpected repairs on common areas such as sidewalks or parking lots.

It’s important to get a detailed list of what fees cover prior to buying so you know what your monthly costs will be.

Since the HOA board is responsible for managing finances, part of its duties is to oversee the collection of fees. Homeowners who fall behind on paying fees are subject to liens on their properties, which can make it difficult to sell properties.

As part of your research into an HOA, you should find out how many owners are behind on their fees. This will help you to determine how financially stable a community is.

Read more:

Beware the ‘Condo Commando’

The internet is filled with threads about how to legally annoy your HOA, written by homeowners who have dealt with a “condo commando” and have resorted to petty revenge.

Though the definition ranges from an HOA board member who is power-hungry and uses intimidation to enforce rules to a busybody who butts into other peoples’ lives unnecessarily, condo commandos can sometimes be found in both single- and multi-family complexes.

While some of the internet’s advice on how to deal with them ranges from the whimsical (raise chickens in your yard to annoy your HOA) to the more serious (take legal action), you should understand that this may be a part of living in your new home.

The Bottom Line

While HOAs can provide many benefits, including access to amenities that would be expensive to pay for yourself, their fees can be high and they can also impose restrictions that some homeowners might find frustrating. Before buying in a community with an HOA, be sure to do your research to ensure the perks of the HOA outweigh the drawbacks.

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