If you buy a condominium, townhome, or single-family home in a newer development, or even an older neighborhood where homeowners are concerned with property values and aesthetics, you will most likely be required to become a member of the community’s homeowners association (HOA).
About 20 percent of Americans live in a community governed by an HOA, according to the Community Associations Institute, which educates volunteer board members and association management professionals. The number of communities covered by HOAs has grown from about 10,000 in 1970 to more than 333,000 today.
Community associations are established by developers and then turned over to a volunteer board of homeowners once all the homes in the development are sold. The volunteers are responsible for making sure facilities are maintained, collecting maintenance fees, and enforcing the rules. While there are laws governing the behavior of HOAs, these associations can still have a powerful impact on your rights as a homeowner. Following are some tips on how to successfully live under an HOA:
Learn the HOA’s Rules
You may be able to find an HOA’s rules online as well as information about what happens if you violate a rule. Make sure any online information is current. If you cannot find this information, ask your real estate agent for a copy or contact your HOA directly to acquire these documents. Pay particular attention to rules regarding fines resulting from violations. Also, learn about the process for changing or adding rules and whether HOA meetings are held at a time when you can attend if you wish to do so. If the rules are too restrictive, considering buying elsewhere.
Make sure the home you want to buy is not already out of compliance with HOA rules.
Buying into an existing problem can be a headache, so find out what the rules are and whether you would have to make changes to the home to comply.
Assess Environmental Practices
If environmentally friendly living is important to you, be aware that some HOAs may dictate that you use fertilizers, pesticides, sprinkler systems and whatever else it takes to keep your lawn picture-perfect. They may not allow xeriscaping and may limit the size of gardens, ban compost piles and prevent you from installing solar panels. If these things are important to you, make sure you check the fine print first.
Consider Your Temperament
Are you the type of person who hates being told what to do? If so, living in a community with an HOA may be a very frustrating experience for you. One of the major benefits of home ownership is the ability to customize and alter the property to suit your needs, but HOA rules can really interfere with this.
Find Out About Fees
Fees differ for each community. Because of this you should make sure to ask your HOA several key questions, including how are HOA fee increases set, how often do increases occur, and how much are they historically being raised. Find out how large the HOA’s reserve fund is and if you can get a printed history of HOA dues for the past 10 years. Ask for a record of special assessments that have been made and what assessments are planned for the future. Find out what the monthly dues cover.
Try to Get a Copy of minutes from the last meeting or sit in on an HOA meeting before you buy
The meeting minutes can be very telling about the policies of the HOA. Ask what are current and past conflicts, what is the process for resolving any conflicts, has the HOA sued anyone and how was it resolved? Also, talk to neighbors who have lived in the neighborhood for several years about their opinions of the HOA and experiences they have had.
Watch for under-management
Not all HOAs are over-managed. The opposite problem may be an HOA where no one really cares and where no one is interested in maintaining the neighborhood, making repairs, hearing resident grievances or being on the board. Residents may simply take turns serving as HOA president or randomly appoint someone, so be prepared to serve in this role whether you want to or not if that is the case with your community HOA.
Consider the impact of HOA fees in your short and long-term finances
A property with high HOA fees might end up costing you as much as the house you don’t think you can afford.
The Bottom Line
Homeowners’ associations can be your best friend when they prevent your neighbor from painting their house neon pink, but your worst enemy when they expect you to perform expensive maintenance on your home that you don’t think is necessary or impose rules that you find too restrictive. Before you purchase a property subject to HOA rules and fees, make sure you know exactly what you are getting into.