Across the U.S., homeowners’ associations are on the ascent. According to the U.S. Census Bureau, 59 percent of newly constructed homes in 2014 were part of a homeowners’ association. That’s up from 46 percent in 2009.
So, what’s the draw of homeowners’ associations? By the same token, what are the drawbacks?
“A well-run and managed HOA can be a blessing, and a poorly managed HOA can be a curse,” says Bruce Ailion, a broker at RE/MAX Town and Country in Woodstock, Ga.
Here, real estate agents and homeowners weigh in on the blessings and the curses of homeowners’ associations (HOAs).
Pro No. 1: Your neighborhood will look good.
Generally, an HOA establishes rules to ensure the neighborhood looks sharp, says Brad Pauly, owner and broker at Pauly Presley Realty in Austin, Texas. These include strict guidelines about keeping lawns manicured, restrictions on parking boats and other large vehicles on the street, and limitations on exterior paint colors.
“This type of oversight eliminates issues with one or two properties weighing down all property values due to an unpleasant exterior,” says John Lyons, a broker with Baird & Warner in Chicago.
Pro No. 2: You’ll enjoy access to amenities.
An HOA usually offers community amenities such as a pool, a fitness center, parks, children’s play areas and security gates, Pauly says.
Pro No. 3: Your maintenance costs will be shared.
HOA dues are earmarked for maintenance of shared spaces, according to Lyons. This includes community lawn care (but not for your own yard), community snow removal (but not for your own property) and upkeep of common areas like the pool or the fitness center.
Pro No. 4: You’ve got a built-in mediator.
Involved in a tiff with your neighbor over that big oak tree that’s losing limbs? You can settle some confrontations with your neighbors by taking your grievances to the HOA’s board or management company, Lyons says.
Pro No. 5: You can get to know your neighbors.
Gina Estrada, who lives in a gated HOA community in Clovis, Calif., says that if you’re elected to serve on the HOA board or are otherwise active in the association, you’ll become better acquainted with your neighbors. Heck, you might even make some new friends. “I believe we should know our surroundings, including the people in them,” Estrada says.
Con No. 1: You’ll fork over HOA dues.
When buying a home in a community with an HOA, you’ve got to add HOA dues to your budget. The dues vary, but typically run in the hundreds of dollars per month.
Con No. 2: Your hands will be (somewhat) tied.
If someone buys a home in an HOA community and wants to make changes to the property, such as the addition of an enclosed patio, it normally must be approved by the HOA’s board. “It’s possible that an HOA could prevent certain updates on a home,” Pauly says.
Con No. 3: You might be hampered by an HOA’s financial woes.
If an HOA is facing financial problems or is ensnared in a lawsuit, it could harm your ability to obtain a loan for a home and could hurt sale prices of homes in the community, Pauly says.
Con No. 4: You’ll lose some of your freedom.
When you live in a community governed by a HOA, you’ll have to follow its rules, even if you think they’re ridiculous, Lyons says.
“You do, however, have the option of petitioning the homeowners’ association to change any rule you don’t agree with. But if you lose, you will have to live with it,” Lyons says.
Con No. 5: You might be the victim of a “rogue” board member.
Estrada says her HOA elected a “rogue” homeowner to the board who decided to flout the rules and do whatever he wanted. For instance, Estrada says, the rogue board member thought the community needed speed bumps to slow down speeding drivers, so he had them installed. That move caused a neighborhood uproar. The process to take out the speed bumps and remove the rogue homeowner from the board cost several thousand dollars, including legal fees, she says.
“When there is one rogue homeowner, it can really mess things up,” Estrada says.
Problems also arise when homeowners stop attending HOA meetings, Estrada says, and it’s left to a small group of people to make decisions.
“The board of directors is made up of your neighbors. If you want to have a say in how things go, you have to serve on the board,” says Ailion.
John Egan is editor in chief at LawnStarter, which connects homeowners with lawn care professionals.
well thought out article weighing both sides. agents should always get copies of HOA financials, rules, regulations, public offering statements and minutes of last meeting (more if necessary) for themselves as well as their customers and clients. Advise reading and if more clarification deemed needed then seek proper help to uncover what is murky.
For a more in depth look at HOAs, please see my 22 page HOA report at http://www.HOASavers.com. One huge problem is that the HOA management companies are not licensed and substantially regulated, and should be thru the Dept of RE. Should we ever be successful in this happening it would remedy some of the issues. Homeowners should NOT have to hire an attorney to get the HOA board and the HOA management company to follow laws. Too many owners will face large special assessments due to years of mismanagement. Please contact legislators and the Assoc of Realtors to get support in changing the HOA industry in the US. In the preamble of our Code of Ethics, we should reach out to regulatory bodies to get changes to situations like this that harm our clients. Our clients use licensed agents, lenders, appraisers, inspectors…but after they close their HOA money is in bank accounts with unlicensed and unregulated people on said bank accounts, billions of dollars.
HOAs can be very encumbering, this article shows the clear balance between the pros and cons of buying a new home or living in a community where they are present.
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good points raised in the article but whatever we say HOA is an essential to stay away from big disputes. Some regulations are placed into order which makes living in a condo much easier for everybody.
When buying a home in a community with an HOA, you’ve got to add HOA dues to your budget. The dues vary, but typically run in the hundreds of dollars per month. This is so impressive!
HOA’s a prevalent in Florida. However many HOA communities also have a CDD fee along with them. A CDD is a Community Development District Fund, or municipal bond that was taken out to put in any amenities that would have shared use by the community residents. Pools, clubhouses, parks etc.. all paid back by the residents but collected in the taxes. These fees could range from a few hundred to several thousands of dollars!
Mark
Wow. this is really fair rules and policy here. It will make the places stay humble at all time. Great rules by the way!
I have always believed that the most important purpose of an HOA is to maintain the property values of the neighborhood. The HOA protects neighbors from the excesses of other neighbors who flout the rules or are not inclined to yield to community aesthetic standards. HOA’s that settle differences among neighbors take a large burden off the local and state legal system, so laws governing HOA’s generally favor the HOA in its disputes with its homeowners. Covenants and Restrictions are legally binding on homeownersts, and ignorance is not an acceptable excuse. If you are buying a property with an HOA, an important part of your Due Diligence should be to read the covenenats before you buy. You might see a rule or restriction that would make that property much less suitable for your needs.
A properly written set of Covenants/Restrictions and By-Laws make the management of the HOA pretty straightforward, and it can often be managed by a Board of (unpaid) volunteers from the community. A poorly drafted set of govening documents leads to all kinds of issues that often drive the HOA Board to hire an outside management agency to govern the HOA. Annual dues then have to be raised to cover the cost of the management firm.
One other thing to consider about HOA’s: in gated communities, the road maintenance, including curbs, gutters, and storm drains are the responsibility of the HOA. The roads in gated communities are normally considered private property, not county property. So HOA boards must put substantial sums of money aside for routine road maintenance and repair, snow removal, etc. That’s why annual dues in gated communities are so much higher than in ungated communities.
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Thank you dear