What is HOA? Pros & Cons

Imagine it… beautifully landscaped yards, immaculately cut lawns, tastefully painted houses, perfectly aligned mailboxes. It’s suburban heaven.

Except for that one house. You know the one. With the overgrown lawn full of weeds, crooked-leaning mailbox, obnoxious political sign in the front yard…

That’s exactly why homeowner’s associations (HOAs) were invented. Many residential neighborhoods have an HOA structure in place. This system helps to maintain a clean and cohesive atmosphere throughout the community. While the HOA may spare you from some responsibilities, they can also come with some homeowner obligations. Before you purchase a home that makes you part of an HOA, look into what that entails.

The PROS:

1.    Landscaping

An HOA usually handles a lot of exterior upkeep. It varies, with some HOAs only maintaining common areas and enforcing grooming standards you must uphold for your personal property. Some HOAs handle all exterior maintenance, including mowing your lawn and trimming bushes, especially if you’re in a condominium community!

2.    Higher Price Point

Single-family homes under HOAs sell for an average of 4% more than similar homes outside of HOAs, according to University of California at Irvine researchers Clarke & Freedman.

3.    Amenities

Some HOAs include swimming pools, tennis courts, golf courses, playgrounds, and gyms – none of which you’ll have to maintain personally!

4.    Less bills

While HOAs vary, one cost frequently included in the fees they collect are utilities, which cuts down on the number of bills you’d pay each month!

5.    Neighborhood Conflict Resolution

Sometimes it’s good to have an advocate, and if your neighbor plays loud music or has a dog that barks at all hours, you can talk to your HOA and they’ll take it from there.

The CONS:

1.    Fees

Sometimes called dues, HOA fees are mandatory and can be expensive, depending on the community and what the fees include.

2.    Risk of Lien or Forclosure

Paying your HOA fees comes in addition to your mortgage, property tax, and homeowner’s insurance. You could also be fined if you break a rule. If you can’t or don’t pay these fines or fees, you run the risk of the HOA placing a lien on your property or losing your home to foreclosure.

3.    Less Freedom

HOAs have meticulous guidelines, particularly about homes’ exteriors. Some are more picky than others, and rules can range from approved paint colors & garbage cans in public view to driveway cleanliness and grass length. They can even regulate your window coverings and grass fertilizer! It’s all to promote a certain, polished neighborhood appearance, but the rules can somewhat restrict personal expression.

4.    Possible Mismanagement

Like any governing body, an HOA can be efficient & professional, or it can mismanage & misspend. The most common reason HOAs face lawsuits is a failure to repair, maintain, or replace “common elements or units,” like a leaky roof in a condo.

Before you take the leap into a planned community, be sure to ask for the HOA’s declaration or master deed, as well as the HOA’s financial status and whether the home you like has any outstanding debt to the association. Be sure to check out the CCRs.

Drive through the neighborhood and look at how the HOA is affecting the community. Talk to the residents who live there and ask what their opinion is of the management.

Just remember, not all HOAs are created equal – there are both good ones and bad ones out there. Do your research before you sign and HOA might be your best friend!