HOA 101

Picture this: you and your family are standing in your new home, surrounded by boxes, ready to unpack and make your space feel as personal and comfortable as possible. You draw up plans to plant a garden, replace the windows, and build a BBQ pit, and you’re excited to get to work on these renovations.

But as you’re picking out materials from the hardware store, you overhear another customer talking to an employee about her HOA rules, and how she can accomplish her vision without violating them. Just then, you remember the fine print in your paperwork about your HOA, and you realize you haven’t given it much thought outside of the extra $20 per month it will cost you.

Now, you have to rethink everything.

If you’re in the market to purchase your first home, you probably haven’t had many encounters with HOAs, or Homeowners’ Associations, before now. Real estate listings might mention dues and not bother to delve deeper than that. But all homeowners should know what HOAs actually are.

Homeowners’ Associations use rules called covenants, conditions, and restrictions (CC&Rs) to hopefully avoid problems such as unruly front lawns, poor road maintenance, and excessive noise. While this benefits you by making sure your neighbors stay in line, it can also stand in the way of plans you may have for your own home.

HOAs are usually made up of homeowners in a given neighborhood who have volunteered to serve on the board, so more often than not, they genuinely have the best interests of the residents in mind. However, it’s important to know what you’re getting into, so here are some common pros and cons to HOAs:

PROS:

-        Rules are meant to keep neighborhoods clean and presentable

-        Dues are used to maintain gardens, roads, and other common spaces

-        Well-maintained neighborhoods see more stable property values

-        HOAs can mediate neighborly disputes

-        You may have access to amenities such as a pool, dog park, or recreation center

-        You will be able to vote on the implementation of any future rules

CONS:

-        You must pay dues either monthly, quarterly, or yearly. These can range from just a few dollars to hundreds, depending on your area

-        HOAs can dictate the appearance of your home, including the plants in the front yard and the exterior paint color

-        You may be restricted from renting your home, either in a long-term (lease) or short term (Airbnb, VRBO) capacity

-        The HOA may conduct assessments of your home in special cases

-        HOAs can impose fines and even force the sale or foreclosure of your home if you do not comply with any mandated changes to your property

As HOAs are becoming increasingly popular in many new, single-family housing developments, there’s a good chance that you will come across several homes that are part of one in your search. If the home you’re considering purchasing is currently in a neighborhood governed by a Homeowners’ Association, membership is required, and you will not have the choice to opt out.

It’s important that you review CC&Rs for all neighborhoods you’re considering, and that you don’t wait until closing to learn what will be required of you. Better yet, add a contingency to your purchase contract that you receive these documents well before your close date.

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