What You Need to Know About HOAs


You're buying into a residential community — made up of condominiums or single-family homes — that is governed by a homeowners association. Is that a good thing? Or should having to deal with an HOA make you nervous?

The answer, unfortunately, isn't simple. Homeowners associations, better known as HOAs, do come with some significant pros, including giving you access to community amenities such as swimming pools, parks, and fitness centers. But when you live in a community run by a HOA, you'll also have to follow the association's rules, which could limit everything from how many pets you can have in your condo or home to what type of alterations you can make to your property. You'll also have to pay an extra monthly fee to support the association.

Before you move into a residential community governed by an HOA, make sure you do your research: Find out exactly how much it costs to be a part of the HOA and what benefits the association brings to its member-owners.

What You'll Pay and Why You'll Pay It

When most owners think of HOAs, they think of that extra monthly fee they'll pay. And it's true — HOAs can be expensive. Fees can vary widely, but you'll usually pay somewhere between $100 to $600 a month, though condos and housing developments with more amenities will typically charge more.

There's a reason for this monthly fee, though: It's what you pay to make sure that the common areas of your community, whether it's the lobby or parking lot in a condominium, or the swimming pool and community center in a housing subdivision, are maintained and repaired. The fees that homeowners associations receive each month from residents go into a fund. The officers running the HOA — who are typically residents of the community itself — use this money to fund landscaping, mowing, cleaning services, maintenance, and any repair jobs that come up.

A Special Assessment Can Hurt

There might come a time when your HOA votes for a special assessment. This can be a big hurt to your finances. Say your condo building's roof needs to be replaced. Instead of paying for this big expense from the pool of money collected each month from HOA fees, the association might vote to levy a special assessment to cover the replacement costs.

In an assessment, each household in the community will pay an extra fee to fund the repair job. These extra financial hits can be steep. Make sure, then, that your HOA has plenty of money in its coffers to tap when an emergency repair comes up. You don't want to be subject to a hefty assessment every time something goes wrong in your condo building or subdivision.

The Amenities Can Make a HOA Worth It

There is a big positive that comes with HOAs: They make the amenities in subdivisions and condo complexes possible. You might not be able to afford an in-ground swimming pool or on-site fitness center on your own. But if you buy into a condo development or residential subdivision, the fees collected by the HOA give you the chance to enjoy these amenities.

Just make sure that the amenities themselves are important to you. Otherwise, you'll be paying a monthly fee for swimming pools, clubhouses, and business centers that you never use.

HOAs Do Place Limits on What You Can Do

Every homeowners association publishes its own set of covenants, conditions, and restrictions, better known as its CC&R. These rules can severely restrict your activities while living in the community. Your association's rules might restrict you to just two dogs, for instance. They might prevent you from painting the exterior of your home your favorite color. The rules might forbid you from making certain exterior improvements to your home, too.

Again, it's important to read a copy of an association's CC&R documents before you make an offer on a residence.

You Can Serve on the HOA Board

HOAs are governed by a board usually made up of residents of the housing community. If you want to have a say on how your association operates, run for office. Yes, HOAs run regular elections. Sitting on a HOA can give you more power over how your condo development or subdivision is operated. But it also comes with significant responsibility; you are, after all, responsible for determining how to spend the money of your fellow residents.

Do you live in a community with an HOA? How's it been for you?

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This article at least mentions some but severely understates or omits most of the downsides of HOA burdened property. People should know that in most states the HOA corporation has no obligation to maintain or repair anything. The restrictive covenants obligate the homeowner to pay the HOA corporation but do not obligate the HOA corporation to maintain or repair. If the homeowner cannot or does not pay, the HOA corporation can foreclose on that homeowner and divest the homeowner of title and ultimately possession of their property. This wasn't mentioned at ALL in the article. Also boards (particularly upon the encouragement of HOA management companies and HOA attorneys) are known to "change the rules" or adopt resolutions which operate to impose greater restrictions on your property that when you purchased it - so "reading the rules" before you buy offers little protection for the person that actually purchases.

Your home becomes the security for any debt the HOA corporation board racks up - and in most states you have no say about how much debt the HOA corporation racks up. The management companies thrive on creating financial hardship for homeowners because a significant component of management company fees is a claim to "late fees" if your assessment is not timely paid. The management company does nothing to earn these "late fees" but will engage in various physical and accounting tactics to create an arrearage where none exists. For example, they will encourage a board to adopt a "fining" policy. This isn't a government, police, court, or judge but the management company will create excuses to impose a fine. Then the management company will engage in what is known as the priority of payment scam to apply assessment payments to "fines" and "late fees" for the management company - leaving you a paper arrearage in order to create another late fee for the management company. There are numerous fee pyramiding schemes these management companies engage in to your detriment. You will also find that in most states you have no right to vote or run for office. To the contrary, the board may suspect any voting or other "privilege" at its whim.

As far as amenities are concerned, most are flytraps put in by the original developer to attract buyers. They weren't meant to last, they were just eye candy. So the HOA board and management company are always coming up with excuses to charge higher assessments or special assessments - and you have no way to force them to be spent on the amenities that need repair. Finally, it is always cheaper to join a gym or swim center of your choice than to purchase HOA burdened property for the amenities. If the gym price goes up too much or the amenities fall into disrepair you can leave and choose whether to join another gym. Not so with the HOA. You have to keep paying at risk of foreclosure. You can try selling but good luck with the run down amenities and the assessment obligation

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