What You Should Know About HOAs
For many people, buying a house represents achieving a life goal: having a place to call your own truly. No more landlords telling you whether you can have pets, no more restrictive lease clauses, and no more rules, right? Not exactly. If you decide to buy in one of the many residential communities in the US that are governed by a homeowners association (HOA), you might be surprised to discover just how much control the association can wield. Of course, there are benefits to living in a community with an HOA, but be sure to understand what will be expected of you whenever consider buying within such a community.
What is an HOA?
An HOA is an organization commonly found in housing developments like gated communities, apartment complexes, and even condominium buildings. They seek to create a uniform atmosphere within the community through regulations surrounding the appearance of properties and even the behavior of residents, such as how tall your lawn can be, when you can take your trash out, or what color you can paint your home. If you buy a home within a neighborhood or building governed by an HOA, you nearly always have to join it.
What are the Drawbacks of an HOA?
- Rules, rules, rules. HOAs will normally list their regulations in a document called a Declaration of Covenants, Conditions, and Restrictions. All HOA members must follow these rules, and fees and even lawsuits will often punish failure to comply. Make sure to read all the rules and regulations of an HOA before deciding to buy the property!
- Fees. HOAs aren’t free — you can expect your HOA fee to be anywhere from $100 to $700 every month. Be sure to factor in the cost of your HOA fees when considering what size mortgage loan you can afford. Note that your lender bank will also consider your HOA fees when calculating whether you would be able to afford a property. Additionally, it’s a good idea to check how your HOA handles big projects like replacing a perimeter gate: is there a reserve fund, or will you get an additional bill?
What are the Benefits of an HOA?
- Community amenities. You do get something for your money. Residential communities governed by HOAs often have shared amenities, like perimeter gates, pools, or even golf courses! If you're considering living in an HOA community, it’s a smart idea to compare not only the fees but also the perks between different HOAs in your area.
- Maintenance of common areas. In exchange for your dues, most HOAs will include the maintenance of any common spaces, such as landscaping the front lawn of the welcome center or keeping the pool up to hygienic standards.
- A uniform appearance. While some might balk at the idea of an organization telling them what color their roof can be, others love knowing their neighborhood will be kept to certain aesthetic standards. If you’re the type of person who can’t stand your neighbor’s ridiculous lawn sculptures, you might love living under an HOA.