HOA: Are they worth it?

Homeowners associations (HOA) are essentially small governing bodies over a particular neighborhood or community. The HOA board consists of homeowners in the development or complex. This governing body establishes the rules and regulations that members adhere to along with the amount of dues or fees to be paid monthly, quarterly or annually. Although membership in the HOA is mandatory, there are many positives and negatives that go along with community living.canstockphoto40967861

Benefits:

  • An HOA offers low maintenance. Usually, trash, snow removal and landscaping services are handled by the association and included in the dues. This means less work for the home owner.
  • Many appreciate that the HOA regulates community appearance. Ensuring that your neighborhood will look good. Everyone must meet certain standards, which means no unkempt lawns or peeling paint.
  • Access to amenities including pools, fitness centers, parks and security gates all add to the appeal of an HOA.
  • Having a disagreement with your neighbor? No problem, third party management provides you with a built in mediator. You can easily take your grievances about next doors barking dog to the HOA board.
  • Everyone shares the maintenance costs. Maintenance of common areas, snow and trash removal, of the pool and other areas are shared responsibilities covered by the dues.
  • Living in an HOA reduces your responsibilities. Along with handling landscape, trash and snow removal, HOA sometimes carry insurance on the properties and cover roofing and other costs.

Challenges:

  • Naturally, the fees required by some associations turn people off. Although HOA dues vary, they can be in the hundreds per month. Make sure and budget not only for your mortgage payment, but the dues as well.
  • HOA rules, restrictions and dictations somewhat ties your hands. Some HOA have restrictions regarding paint colors and any additions or changes you want to make to the property must be approved by the board.
  • You could be hampered by the HOA financial woes. This means that an HOA facing financial problems or a lawsuit could hurt the sale prices of homes and the community and effect your ability to obtain a loan.
  • You might lose some of your freedom. Just as your hands could be tied, you will have to follow the rules and regulations of the HOA no matter how ridiculous you might think they are.
  • Surprise – they can spring assessments on you! The HOA board can decide to impose special assessments when needed for improvements or repairs.
  • They can limit your ability to rent. In order to get a loan for a property in the community the owner to renter ratio must be retained. Different lenders and HOA have differing standards, but these communities prefer that renters live somewhere else.
  • They can foreclose on your home if you get behind on your dues and assessments. This is usually a last resort. However, it can be done.

Making a decision:

First, weigh the pros and cons against your own lifestyle choices. Then, familiarize yourself with the ins and outs of the rules of the HOA before you buy to avoid surprises. Finally, you may find that HOA living can be equally satisfying and then again, you may find that it’s not for you.