Homeowner’s associations, or HOAs, are a blessing for some, and a curse for others. In a common interest development, or CID, a homeowner belongs to an organization that set rules called covenants, conditions and restrictions, or CC&Rs in order to protect the community and conserve property values. HOAs are responsible for upkeep of common areas of the communities. Today, 55 million Americans live in a development overseen by an HOA, and those numbers are quickly rising. These communities have numerous benefits that outweigh the disadvantages for millions of people establishing roots in these developments.
People tend to oppose HOAs because of the strict CC&Rs they impose on the homeowners within the developments. If a homeowner breaks one of the rules, a fine is imposed. If that fine goes unpaid, the HOA can legally sell your house to collect. Oftentimes, homeowners do not realize what they are getting themselves into until it is too late. When you purchase a home within a CID managed by an HOA, you are entering into a legal contract, and are obliged to comply with the HOA. Typical CID rules prohibit things such as flags, clotheslines, wind chimes, signs in your lawn or in your windows, garage sales, and pets. Others are stricter and limit where you may put out your garbage for collection, what paint schemes you may use on your home, outbuildings or outdoor furniture, unruly behavior or noise, even the use or style of outdoor storage sheds.
Living in a community controlled by an HOA is an asset for many people. Most properties in neighborhoods run by a homeowners association conserve their value. Appearance is important to the HOA, so the association ensures the community always looks great. These areas can be attractive because of the recreational amenities they offer. Developments can include parks, pools, fitness centers and walking trails and are completely maintained by the HOA. Others are drawn in because of the associational management. Homeowners like the idea that when any type of neighborhood trouble arises, such as a loud party, a maintenance issue in a common area, or someone has parked in front of your driveway, there is community management that will take care of the issue.
If you are considering buying into an HOA run community for the first time, my advice is to do a little research first. Most of these developments run by homeowners associations do very well, but the fact is, the rules are very difficult to change and are put in place by a group of investors who have never lived on site, and likely do not have close ties to the development, but rather allow a management company to have control. Some things I recommend researching are as follows:
• Learn the Covenants, Conditions and Restrictions of the HOA.
o What happens if you violate a CC&R?
o What is the process or adding or changing a CC&R?
• Ensure the home you are looking to buy already complies with the HOA.
• Assess environmental practices
o Does the HOA require you to use fertilizers, pesticides, sprinklers, or anything else to ensure your lawn or landscaping is immaculate.
• Consider your temperament
o If you are someone who hates being told what you may and may not do, perhaps living under the rules of an HOA is a bad idea.
• Find out about fees.
o How much are the fees now?
o Must you pay monthly or annually?
o How have the fees increased over the past 5 years, and how are they expected to change in the next 5 years?
o How large is the HOAs reserve fund?
o What do your dues cover?
o Ask for a record of special assessments¹ and if special assessments are planned.
1. Special Assessments – A fee imposed to cover the one-time expense of a major repair or improvement if the HOA’s reserve funds are too low to cover the cost.
• Try to sit in on an HOA meeting, or get meeting minutes from the most recent meeting.
o Be alert for any drama, power trips or petty politics.
o Talk to other homeowner in the community.
• Be vigilant for under-management.
• Find out what kind of catastrophe insurance the HOA has.
o If the HOA does not have sufficient insurance, should a disaster happen, the HOA could impose a special assessment to pay for costs of repairing or replacing common areas should they not have ample reserve funds.
• Consider the HOA fees on your short term, and long term budgets.
Living in a Common Interest Development run by a Homeowner’s Association has provided peace of mind and harmony for millions of Americans. A well functioning development can create community pride and close knit neighborhoods that are safe and fun.♦
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