You’ve found the perfect home in the perfect part of town, and the financial factors are all lining up for you to make the purchase, but the house is in a community governed by a Homeowners Association (HOA). What does this mean for you? There are some pros and cons to weigh, and depending on the person, this could be an added value or a deterrent.
A Homeowners Association is usually funded by fees collected from the residents of an apartment, condo, neighborhood or planned area, and it is put in place to enforce rules and regulations, and to set a budget for the community in order to maintain things like amenities and landscaping. The board of directors will be made up of community members, and there should be a way for you to apply to join or be elected in, depending on their rules, which they have legal rights to enforce on the properties they represent.
Some of the enforceable rules they might have are related to the appearance of your home and the landscaping. For example, if you live in a neighborhood with a large yard and you leave it unkempt for too long, you may receive a fine or a notice that you need to trim your lawn to the standards of the HOA, which could be very specific to a height of grass they expect in the neighborhood, or the trimming of large trees and bushes, etc. This can affect the value of surrounding homes when making a sale, so some HOA groups take this very seriously. This is just one example that is a common rule of most HOA’s, but some can have specific rules that they are allowed to sue you for breaking. Make sure to get a list of their rules and regulations and read it closely before signing any agreements with them or buying the home, to be sure you can live within their rules.
If you are a member of an HOA you will most likely be required to pay some sort of fees each month or year. These fees can pay to keep up amenities, such as a pool or nature trail area in the neighborhood, or change the lightbulbs and maintain the landscaping in common areas. The unfortunate thing is that HOA fees can range from small fees to amounts reaching as much as a few thousand dollars a month, depending on the association. It is important to research the HOA from as many sources as you can and find reviews of people who have dealt with them in the past in order to find out how expensive the fees may be and how efficient and fair they are with running the HOA, as a poorly run HOA can lead to headaches for you down the line. If you don’t have the funds to pay the fees that the HOA requires, they can cause financial trouble for you, such as placing a lien on your property and sending you into foreclosure, so make sure you can fit the payments into your budget ahead of signing.
Neighborhoods, condos, and living areas that feature HOA’s that are run correctly and give back a fair value for what they ask of their community can bring improved property values and amenities that may make it easier to sell a home. This could entice you as a buyer to pay that extra bit for the extra luxuries that may come along with it, such as a golf course or swimming pool. So while it might initially seem like a deal breaker or something that you don’t want to deal with, you should weigh the benefits, and remember that as an HOA member, you can help steer your community towards where you’d like it to be in the future.