New home buyers have surely heard the term: HOA, which stands for homeowner’s association. But what exctly is an HOA, and what can an HOA do for you? Maybe more importantly, what are the downsides and risk of buying a home within an HOA? I’m here to explain what they are and help you decide if you think they are a good fit for you when buying a home.
Here’s the actual definition of an HOA. An HOA is the governing body of a development or complex. Membership is typically mandatory, but they aren’t always. For example, I live in a old-Florida neighborhood which has a voluntary HOA, and the fees are extremely low – $20 a year. It was a personal choice by my husband and I to find a community with little or no HOA, because we wanted to keep our boat at our home since we live close to the water and in between two boat ramps.
With mandatory HOAs, you automatically become a member when you buy a home in the community. You don’t have the choice of not joining. The purchase of your home becomes a contract with the HOA. You agree that you will obey all the HOA rules.
There are HOA Rules
Also called covenants, conditions, and restrictions, the rules of the HOA apply to both you and your home. It’s incredibly important to study the “rules” before you buy your home so you know exactly what you can and cannot do. For example, they could tell you what you can paint your home, how many cars you can own or what kind are allowed and where you can park your car(s). It will also include what pets are allowed, if any, and what size. Noise restrictions will be on there also.
If you don’t know the rules, you don’t know if you’re breaking one or not. And you do not want to break HOA rules!
There can be stiff penalties for breaking HOA rules
HOA generally have the ability to create liens on your property. The extent to which will be detailed in the HOA covenants. If you break one of their rules, they usually ask you to cure the issue, and may levy a small fine. However, it can get much worse than that. If you refuse to cure the issue, the HOA has legal recourse, including the forced sale of your home through foreclosure (yes, seriously!)
You must pay your dues
Yes, you must pay to live in the community. The fees are usually monthly, quarterly, or yearly. The HOA will then use the money to maintain the communities common grounds such as the pool, parks, walking paths and recreation areas. The fees also help pay to administer the HOA.
Advantages of HOAs
It’s not all doom and gloom – there are many advantages to HOAs. The main advantage from a real estate perspective is market condition for your neighborhood will be stable. You won’t have a yard uncut or a neighbor working on his truck in the yard. The rules are there to keep the community beautiful and to offer amenities to enjoy such as a pool or playground. You will get to vote and have a voice in any changes that may be considered.
Also, HOAs can offer social influence – it’s easy to get involved in your HOA, and you’ll meet some great neighbors. HOA volunteers tend to be really good people who care about their neighborhood, and getting civically involved in their community. Of course, if that’s not your thing, you can just pay your dues, and enjoy your benefits!
So there’s the good and bad of HOAs. Some love them, and some avoid them. So during your home search, it’s really important you take the time to educate yourself on the HOA of a home you are looking into.
Ask your Realtor about the HOAs they know of in the areas you are looking into. Hiring a great local Realtor to assist you in your home purchase is a particularly good idea if you are interested in a particular neighborhood – they should know all about the HOAs of different communities.