What Should You Know About Homeowners Associations?

If you're considering moving, there are many factors to take into account, apart from the house itself.

Homeowners associations are one example, and living in a community with an HOA can have both benefits and downsides.

It's crucial to fully understand the implications of living in a community with an HOA before making an offer on a house.

• So, what exactly is an HOA?

It's a governing body in a community, and they are often found in gated neighborhoods, planned communities, and apartment and condo buildings. HOAs are funded and run by residents, with a board of directors responsible for meetings, creating budgets, and enforcing regulations and rules. The rules set by an HOA are legally enforceable.

A well-run HOA can enhance property values by ensuring that the community maintains a certain standard, but a poorly run one can be costly and add more bureaucracy to owning a home in the neighborhood.

If you're a member of an HOA, you might pay dues monthly, quarterly, or yearly. The dues are meant to cover common areas such as clubhouses, pools, walkways, and lighting. HOA fees vary considerably depending on the location and neighborhood or building, ranging from $50 a month to thousands of dollars a month.

• How Do the Rules of an HOA Work?

The majority of HOA rules are related to the exterior of a home, and it's essential to understand them well. For instance, you may have to maintain your lawn in a particular way, paint your house in specific colors, or follow regulations related to pet ownership.

If you violate HOA rules, you'll be asked to comply initially, followed by fines, and, if necessary, a lawsuit. If you fail to pay HOA fees, the board can put a lien on your home, or even require foreclosure, depending on your state.

• What to Find Out About an HOA Before Buying?

Before buying a home with an HOA, it's crucial to find out certain information or ask your real estate agent to do so. For example, request a copy of the most recent minutes or attend an HOA meeting to get a feel for board members' behavior and priorities. Additionally, ensure that the HOA is in good financial standing and ask whether there are any significant issues between the board and homeowners. You must also evaluate how the HOA's rules will fit your lifestyle and how comfortable you are with that level of control over your home and living environment. Finally, review in detail what HOA fees will cover.

When considering the impact of HOA fees and rules, it's crucial to think about how they will affect the resale value of a home you purchase. Many buyers prefer not to have an HOA, and as fees increase over time, living in the community may become unaffordable for some, making it more difficult to sell your home.