Understanding HOAs

You’re ready to take the next step in your life and find your dream home. You want to get out of that apartment and have a place where no one can tell you what colors you can paint your walls and how much noise you can make. Your dream home has everything you’ve ever wanted, but there’s one thing you should ask yourself--is this house located in a community that has a homeowners association?

If your dream home falls under the governance of a homeowners association, you might not have as much freedom over your new house as you think. Before diving into the world of HOAs, let’s take a look at a few of the basics that you should keep in mind before moving into an HOA community.

What Is an HOA?
An HOA is a self-governing organization in common-interest communities where homeowners collectively pay fees to maintain the buildings or surrounding community. They are typically run by resident homeowners elected to a board of directors that oversee the HOA’s management. HOAs were created to protect you from things in your neighborhood that bring down everyone’s property value, such as that uniquely-decorated house or the guy who is always doing car repairs in his oil-stained driveway. HOAs make sure the community as a whole is kept in order and is aesthetically pleasing to help maintain property values in the area.

If you buy a property with an HOA, you automatically become a member and agree to abide by the HOA rules and pay dues. These dues are used to help maintain communal areas or community amenities such as a pool or fitness center. If you live in a condo, HOAs are charged to help maintain the community’s appearance and amenities, but it also covers exterior maintenance of the buildings and in some cases, insurance. (For example, in Florida, some HOAs provide hurricane insurance and the cost is included in every residence’s dues.)

What Are The Rules And Regulations?
HOAs establish rules and make sure the homeowners within their jurisdiction abide by them. These are known as covenants, conditions and restrictions, also known as CC&Rs. These rules apply to every homeowner in the community. Types of rules vary, but some common ones include:

• Noise Restrictions - Most HOAs implement quiet hours, meaning you can’t make too much noise after a certain time. There might also be a restriction on the noise you’re allowed to make, whether it’s having company over or even doing yard work.
• Decrease Clutter -HOAs are concerned with the overall appearance of neighborhoods so they make it a priority to limit the clutter on the exterior. This can mean patio furniture might be limited, barbecue grills can’t be left on a patio, garage doors cannot be left open and certain things can’t be left in the yard. A particular high-end condo complex on the water in St. Petersburg, Florida doesn’t allow grills on balconies or leaving beach towels or clothing to hang dry on the balcony.
• Pet Regulations - There might be several pet rules including how many animals you can have, pet clean up, leash laws and even the types of pets allowed.
• Maintenance Requirements- Most HOAs will require their homeowners to maintain a level of curb appeal, including lawn, siding, driveways and walkways to be maintained. They may even limit your exterior paint color choices. However, in some communities, the HOA provides lawn care and snow removal and the cost is included in the dues.

HOA Dues
Homeowners can expect to pay anywhere from $200 to $1,500 or more per year, depending on the amenities offered by the community like tennis courts, swimming pools, gyms or even a community center. The Community Associations Institute estimates that monthly HOA dues range from $100 to $300 for single-family homes while some condo owners report paying more than $500 a month. The fees pay for anything the HOA deems necessary for the betterment of the community.

While some people appreciate having HOA rules and regulations in place, other may dislike how restrictive they can feel. Below are some pros and cons of HOAs.

Pros

• Your property value will benefit from more stability due to rules governing the maintenance and appearance of homes.
• HOA communities have access to exclusive amenities.
• Simple rules set in place can help make the neighborhood easier to navigate with parking regulations and speed limits put in place and also make it safer.

Cons

• HOAs have a lot of power over how you maintain the exterior of your home.
• You can be fined for failing to comply with HOA rules or pay dues.
• An HOA can place a lien on your property if you do not pay the dues.
• You pay for shared expenses like trash, security, amenities and more, so the more things the HOA provides, the more money it will cost you.
• The HOA board makes the rules and decides how to spend the money. If they make rules or spend the dues on items you don’t think are necessary, there’s nothing you can do about it.

Living in an HOA community comes with some trade-offs. On one hand you get a well-maintained neighborhood that comes with nice amenities. On the other, you don’t have as much autonomy to decorate your home as you would like, and you have to pay monthly HOA fees in addition to your mortgage payment. When preparing to buy property, be sure to weigh the pros and cons of living in a HOA carefully and decide if that is the best fit for you.