By Teri Silver
Buying that dream house is part of your long-term financial plan. Whether in an older neighborhood or an area full of new builds, your new home may be part of a homeowners’ association (HOA). What does an HOA do, what are the fees involved, and are HOA fees worth the expenditure?
House hunting has gotten easier now that the internet lets us view potential homes virtually. Finding the right real estate agent is the first step to learning about HOAs, and whether they’re all that different from, say, apartment or condominium fees.
HOA Basics
Homeowners’ association fees are the amounts of money for monthly maintenance and improvements in community spaces and the neighborhood. HOA fees are almost the same thing as condominium fees (for condo owners) but they are mostly used for outdoor maintenance costs.
HOAs enforce rules for residents and their properties. Often called “planned communities,” buyers who purchase a home in condo buildings, townhomes, and subdivisions automatically become members of the HOA and are expected to pay fees. Homeowners’ associations are run by an HOA board of directors, whose (volunteer) jobs are to, among other things, collect fees, arrange for maintenance, pay bills, arrange budgets, and make decisions about the community.
Rentals and Condos
HOA properties are owned by the residents who buy them, but there may be houses purchased for renting, too. Depending on the laws where you are, rental property owners may get a tax deduction for lawn care.
Condominiums and their fees are much like HOA fees—they mostly pay for maintenance and repairs. But unlike HOA income, condo fees aren’t so invested in curb appeal because everyone lives in the same building.
HOA Fees
Actual fees for belonging to a homeowners’ association depend on the location, community amenities, and maintenance program for the neighborhood. Homeowners are charged monthly, typically anywhere from $200 to $400 a month, but they could be as much as $1,000 monthly. (These fees are in addition to your monthly rent or mortgage). Fee hikes are at the discretion of the HOA board. Tip: include HOA fees (on a sliding scale) with your household budget and mortgage layout.
Your HOA fees go toward paying for trash pickup, operating costs, and maintenance (for the community pool, spa, fitness center, pickleball and tennis courts, etc.). Reserve funds are often set up for emergency repair expenses and long-term projects. HOA Rules Before you buy in an HOA neighborhood, here are some “typical” rules to note. Known as “covenants, conditions, and restrictions,” these varying rules tell buyers how they can use their property. Rules may include the color of the house’s exterior, the type of fencing allowed, the number of vehicles allowed on the property, and landscaping requirements. Other possible requirements?
● What kind of pets you can keep
● Whether you can rent out the property
● When to put out the trash and where to place the receptacles
● How to maintain the home’s exterior
● The number or type of construction add-ons for the house
● Noise and odor restrictions
HOA Pros
Buying a house in a location with a homeowners’ association does have its advantages. Homeowners’ associations are responsible for caring for public spaces, like clubhouses, gardens, community swimming pools and walkways, and landscaping around street and neighborhood entrances.
In a HOA community, residents can enjoy neighborhood playgrounds, tennis courts, dog parks, swimming pools, gardens, and community gathering centers. HOAs have rules that keep neighbor “mischief” at a minimum. HOA members can help to foster cooperation between disagreeing neighbors.
HOAs have meetings, parties, and community events for social interaction.
HOA property values stay marketable.
HOA Cons
For some people, a homeowners’ association just isn’t a way to go. Disadvantages to HOAs are the restrictions themselves. Some homeowners don’t want to be under scrutiny as to what they can and cannot do to the outside of their home. Restrictions may include how high a fence can be, what kind of fertilizer to use, and the kinds of plants you can grow in the yard.
Violating HOA rules may lead to fines, disallowing use of amenities and services, and lawsuits. Another con for HOAs is the monthly fee, which can be out of budget for many homeowners.
Is a homeowners’ association worth the expense and restrictions? That’s up to each home buyer. There are good reasons to buy in a HOA neighborhood, but before you do, request a copy of the HOA rules. (If the rules are listed online, print them off to be sure they are the same as when you’ve read them). Before buying a home, remember that HOA rules are a contract—consult a lawyer to fully explain the rules and your legal obligations.
Teri Silver is a journalist and outdoor enthusiast. She and her husband live on 5 acres with a vast lawn, three gardens, a farm, a pond, many trees, and a lot of yard work! The best parts of the year are summer and fall when home-grown veggies are on the dinner table.
