All About HOA’s

What’s an HOA & how does it work?

An HOA (Homeowner’s Association) is an organization that makes and enforces rules and guidelines for a subdivision, planned community, or condominium buildings. HOA membership is almost always a requirement when buying a home in a community with an established HOA. HOA’s exist to maintain order in the community and to preserve property values. The cost and frequency of HOA fees vary greatly, based on the type of property, operating expenses, number of properties in the community, location, and amenities offered.

How are HOA’s governed?

HOA’s are most often headed by an elected Board of Directors. The Board of Directors ensure that Homeowner’s abide by the Declaration of Covenants, Conditions, Restrictions, and/or By-Laws. These are enforceable legal documents with rules and conditions that Homeowners in the HOA community must follow. Punishment to those who violate the HOA rules vary. Depending on the HOA and the severity of the violation, punishments may include additional fees or fines, suspension of community privileges, liens being placed on the property, or in more serious cases, litigation, or filing for foreclosure on the property.

What should I know before buying a property with an HOA?

Review a copy of the association’s Declaration of Covenants, Conditions, Restrictions, and/or By-Laws. Make sure you’re comfortable abiding by these rules and regulations, as they’re legally binding once you purchase the property. If possible, ask the HOA President or another member serving on the Board of Directors about the association’s financial plans regarding maintenance and capital improvements. This is especially important in condominium buildings with shared roofs, parking garages, etc. or in communities with many amenities such as swimming pools, tennis courts, etc. where upgrades may be more expensive. Some HOA communities issue special assessments when capital improvements are needed, where others have reserve funds.

Pros of HOAS:

-Many HOAs provide basic amenities, such as snow removal, landscaping, trash collection, certain utilities, cable, & internet.
-Some HOAs provide extra desirable amenities such as swimming pools, tennis courts, fitness centers, community rooms, playgrounds, & walking trails.
-HOAs typically reduce your responsibilities as a homeowner to some extent.
-Property values tend to be higher in HOA communities due to high maintenance standards, neat & well-kept neighborhoods, & overall presentability.
-Living in an HOA community increases social interaction, community involvement, & neighborhood satisfaction.

Cons of HOAS:

-HOA fees typically increase annually
-Most HOA’s want to maintain uniformity, resulting in strict rules about the appearance of the property’s exterior. The HOA will need to approve changes in design, such as painting the house a new color.
-The HOA may prohibit or limit things such as pets, holiday decorations, exterior storage, flags, satellite dishes, & street parking.
-HOA fees will alter your debt-to-income ratio, which may affect your ability to obtain a mortgage.
-Rentals are often prohibited or come with steep regulations in HOA communities.