What You Need to Know About Homeowners Associations
Just hearing the name, Homeowners Association (HOA) may conjure images of grown adults huddled together in folding chairs in the pool house, arguments ensuing, and that one neighbor on the board who has let a little too much power go to his head, rapping the wooden gavel trying to maintain order in the ranks over the latest petty argument between Bob and Jasmin over shrub height or exterior paint colors.
Most people have fairly strong opinions on HOAs. They either love them or hate them. Let’s take a closer look at why and see what the pros and cons of HOAs can offer.
All In Favor, Say Aye
One of the most positive aspects of Homeowners Associations is that they are intended to keep the neighborhood maintained and protect property values. Essentially HOAs are a “boots on the ground” network of neighbors (or sometimes an outside, third-party management company) who help(s) to ensure that homes, common areas, and deed restrictions are being upheld to agreed upon standards.
Other benefits of a well-managed HOA include the financial stability they afford the neighborhood as dues collected tend to be put back into the betterment of the neighborhood amenities. Community pride and connectedness also rank high on the list of why people love HOAs. Many sponsor neighborhood block parties, annual community yard sales, or pool events.
Finally, those who favor HOAs tend to like the general policing that an HOA does when it comes to safety standards, nuisance activities like noise, speeding, pet protocols, and parking restrictions, as well as architectural controls that often promote continuity of style, quality, and appearance among homes.
All Opposed, Say Nay
While many love the aforementioned rules, restrictions, and regulations, there are seemingly just as many people that loathe them. These anti-HOA folks tend to think that a governing body such as an HOA is too overreaching, too bossy, and in many cases, too picky about the most insignificant of rules.
The major reason people tend to oppose HOAs is, however, the financial cost. The median, monthly HOA fee nationwide is $290, or just under $3500 annually. These fees are collected and used for a variety of improvements from sidewalk repairs to landscaping maintenance in common areas and amenity upkeep. Though many costs of owning a home are deductible on your income taxes, the IRS does not allow HOA fees to be deducted. For some, this can feel like a huge expense without a lot of payoff. Furthermore, if HOA rules or fees are neglected there can, in some cases, be legal repercussions that could follow homeowners for years to come. In some states, defaulting on your HOA fees can even lead to foreclosure.
Love ‘em or hate ‘em, according to Homelight, you have a good chance of encountering an HOA property while house-hunting: Statistics show that homeowners associations (or HOAs) govern nearly 60% of recently built single-family homes — and 80% of houses in new subdivisions.
If you are looking to buy a home in the near future just be sure to have your real estate agent dig into the neighborhood’s covenants, restrictions, and rules according to the HOA. Never enter into a home-buying transaction without fully understanding the implications of any governing body over your neighborhood.