While searching for a home, you’ve probably come across the letters “HOA,” which stands for ‘homeowners’ association’. Often, HOAs receive mixed reviews; some people sing their praises while others don’t want anything to do with them. HOAs are common in condominium complexes and gated communities, but they’re also utilized in certain neighborhoods.
So, are they good or bad? Different HOAs set different rules, and certain circumstances can dictate how effective they actually are. But, if you’re planning to buy a home that is part of an HOA, it’s worth knowing the pros and cons.
Proponents of HOAs are likely to mention the following points when advocating the system. Indeed, these points are attractive:
- Increased property value: HOAs set strict rules as to how each property in the neighborhood should be kept, which often leads to very clean, tidy and well-maintained neighborhoods. Not only does this look great, but it’s also excellent for property prices, as it’s unlikely that anyone will be able to build an ugly outbuilding or paint their home in garish, off-putting colors.
- Shared amenities: Many HOAs offer a variety of shared amenities – such as swimming pools, sports facilities, community centers, and playgrounds – as well as organizing meetups and community events. They also care for the shared structures so you can enjoy them without having to worry about logistics and maintenance.
- Fewer responsibilities: Hate shoveling snow? In most HOAs, several maintenance tasks are done for you, including mowing the grass, trimming hedges and the dreaded shoveling of snow.
- Neighborhood disputes: If you’re uncomfortable dealing with confrontation or conflicts with nuisance neighbors, HOAs can be a great solution for you. A problem with a neighbor can be filed as a complaint, and the HOA will act as a third party to handle the dispute.
With a number of clear benefits, it’s hard to see why some people are so against the idea of HOAs. So, let’s take a look at the other side of the coin:
- It’ll cost you: There’s no such thing as a free lunch. All of those nice amenities and the maintenance of them will be passed on to you in the form of HOA fees, including administrative costs and salaries. These fees are typically paid monthly in addition to your mortgage, and it’s important to factor them in and keep up with them. Missing payments can lead to liens being placed on your home – and eventually foreclosure – even if you’ve kept up with your mortgage payments.
- Rules, rules, rules: Some rules that are enforced by HOAs make a lot of sense and are a great way to keep the neighborhood looking its best. However, these rules can often be extremely restrictive, dictating what you can and can’t do with your own property. In extreme cases, even the color of your blinds or which flowers you’re allowed to plant can be enforced by the HOA. But, typically, you can expect to be required to adhere to parking regulations, maintenance schedules, and rules regarding what color your property can be painted. Because everyone is following the same rules, these neighborhoods can be somewhat devoid of character or charm, and it may look like a cookie-cutter neighborhood.
- You’ll need permission: When you’re part of an HOA, you’ll need to ask permission for pretty much anything that’s out of the ordinary. Need to park an RV at your place over the weekend? Better ask permission. Need to chop down a diseased tree in your yard? Don’t forget to get approval. This can become tedious and time-consuming.
- Everyone is watching each other: Minor problems can become escalated by a neighbor overly keen on reporting issues to the HOA rather than talking to you directly. It can get to a point where you feel the entire neighborhood is spying on one another, and you no longer feel relaxed enough to enjoy yourself.
- Home-based businesses can suffer: Many HOAs don’t allow homeowners to operate a business out of their home, which can be extremely restrictive. They may also prevent you from easily renting your property, which can leave you in a tight spot if your circumstances change.
- HOAs can run into financial difficulties: When they do, it’s normally up to the residents to foot the bill. Issues related to the budget, unexpected legal costs, and emergency repairs can leave the coffers empty, which, in turn, leads to increased fees that can put a real strain on your own monthly budget.