If you own a home in a newer community or in a condo building, then you are already familiar with everyone’s favorite organization - the HOA. Most people’s natural reaction to the term HOA is to at least be a bit skeptical and it can also range to outright dislike.
But, let’s take a step back and look at what function HOAs actually perform and some of the pros and cons for a homeowner living in an HOA-controlled community.
What exactly is an HOA?
A Homeowners Association or HOA is an organization in a subdivision, planned community, or condo building, that makes and enforces rules for the properties and the residents. When you buy a property that exists within an HOA-managed community, you immediately become a member.
HOAs are typically run by an elected board of directors, made up of homeowners. Quick note that communities that are still being built or even recently completed may have a mix of board members that include homeowners and representatives of the builder/developer.
Typically, once the community is complete and the builder is no longer actively adding more homes or amenities, then they leave the board to the homeowners. These homeowner board members are typically elected into office by the community, with each homeowner having a vote (generally one vote per property).
Advantages of an HOA
Let’s hit the good stuff first since most people tend to focus on the negative.
Enforcing Rules and Regulations
Everyone loves rules! OK, no most of us really don’t. So, why is this in the advantages section? Because when you buy a home in an HOA community, you will definitely have neighbors. In some developments, those neighbors may be right on top of you or you may have some space in between properties if the community is filled with detached homes on larger lots. But, either way, you have neighbors in relatively close proximity to your house.
What is one pet peeve of many, many homeowners? When a neighbor doesn’t take care of their property or makes some unpleasant design choices (you mean not everyone likes neon pink colored houses?). The number one concern of many homeowners is keeping their property values up. They spent a ton of money on their home and they want that value to grow. Having a neighbor who lets their lawn grow wild (we’re not talking xeriscaping, we’re talking just 2-foot tall weeds) or has a home that is in obvious disrepair, etc. can have a detrimental effect on your property value and your ability to sell your house.
One of the primary mandates of a typical HOA is to protect the property values of homeowners. So, rules are created that make regular maintenance mandatory and typically preclude bizarre design choices. For this reason alone, HOAs can be beneficial to homeowners.
Maintenance of Common Areas
Many communities have walking trails, common areas like parks, community pools and tennis courts, a clubhouse or a gym, etc. Typically it is the HOA that maintains these valuable homeowner amenities. Typically, you simply won’t find any of these types of amenities in non-HOA communities, for the simple reason that there is no one to manage and maintain them. So, often living in an HOA community provides a number of nice benefits like these.
Planing for the Future
HOAs are also charged with looking ahead at the future needs of the community. This means budgeting for capital improvements (like resurfacing the tennis courts or pool) and then saving money from homeowner dues to ensure that the funds are available when needed to take on various larger (or smaller) projects.
Disadvantages of an HOA
Well, that all sounds nice on the advantages right? Well, there is always another way of looking at things.
Enforcing Rules and Regulations
Hang on. Didn’t we include this in the advantages section? Indeed we did. However, we all know that rules and regulations are not always written well or enforced properly. If a community’s rules are overly restrictive, you may not be able to do even simple improvements to your home without approval - which may be hard to come by.
Rember that HOA boards are made up of people (typically homeowners) who can be opinionated and may or may not be up to doing their job effectively. How happy are you with elected officials in general? So, should you expect your HOA board to be any better? Well, you can certainly hope so.
But, even a highly effective and very fair HOA board may struggle with existing rules and regulations that are not always easy to change (due to both internal rules and often state law). Want to get a new front door that may not exactly match the rest of the neighborhood? Your rules may or may not allow it.
In fact, change is often something that HOA rules are designed to keep at bay. This is why some HOA communities can reinforce the suburban stereotype that every other house is identical.
Dues
HOAs have to have money to take care of landscaping the community park, maintaining the tennis courts, or fixing the fence around the neighborhood. Where does that money come from? The homeowners of course! This generally comes in the form of dues, paid monthly, quarterly, annually, etc.
While no one loves paying those regular HOA dues, what is even worse is if a community faces an unforeseen of unplanned-for expense (foundations in all the condo buildings are crumbling!). Typically dues won’t cover these types of major expenses, which leads HOA to create special assessments, where homeowners are required to pay additional amounts to cover the additional funding needed.
Becoming a Time Capsule
One thing that well-managed HOA communities have to fight against is the tendency to become a time capsule. If rules are paint colors or other landscaping and exterior design improvements are highly limited to help foster harmony in the neighborhood, it can end up looking very dated as new design trends are adopted by more recently develop neighborhoods. This can lead to a community looking run down or simply not as desirable to new home buyers.
