Homeowners’ associations, or HOAs, are organizations consisting of a governing board of resident volunteers who create and enforce rules for a subdivision or planned unit development. If you buy a property within a community with an HOA, you are required to be a member which will happen automatically upon your purchasing the home. There are many varying opinions out there on HOAs, so it’s important you consider whether being part of one is right for you or not.

Pros

Shared Grounds are Maintained

Any common areas in your neighborhood, such as playgrounds and pools, are managed by the HOA. This allows you to enjoy the benefits of these shared community offerings without having to worry about any upkeep yourself. Sometimes, the HOA will even landscape the front yards of any properties, so your lawn may be taken care of—and paid for—by the HOA.

The Neighborhood Looks Nice

Because HOAs have rules for what you can and cannot change about your property, you don’t have to worry about any neighbors’ properties becoming eyesores. Not only does this make the neighborhood look more pleasant for residents, but it can even lead to higher home values. A 2019 study found that homes that are part of an HOA had prices that were, on average, 4% higher than similar homes not in an HOA.

Conflict Mediation and Resolution

If you run into any issues with neighbors, the HOA can help address the situation. If your neighbor has been playing loud music all hours of the night, has an outside dog that barks constantly, or is otherwise breaching HOA rules or acting in a problematic fashion, you can go to the HOA with your concerns and they can act as a go-between to avoid direct confrontation. This is especially helpful if you have addressed the issue directly with your neighbor and no change has been made.

Cons

Fees

HOA dues are a mandatory part of belonging to an HOA, and they may be expensive. They are sometimes collected monthly and other times annually. How high the dues largely depends on your location and the amenities offered by the HOA. Since HOA membership is compulsory when your property is within one’s jurisdiction, there is no way to get out of paying the fees. You should find out how much dues are and determine if keeping up with them will be manageable in addition to your mortgage, utilities, and other expenses.

Strict Guidelines

When you are part of an HOA, you agreeing to follow all rules and regulations. Some people feel that when you own a home, you should be able to do whatever you want to it, and with HOAs, that is not the case. HOAs may set guidelines for all sorts of things, from the color of house paint you use to and what you are allowed to have visible on your lawn, how tall your grass can grow and how many pets you can have. You should investigate the various guidelines set by the HOA and decide if you find them reasonable before committing to buy a property there.

Risk of Foreclosure

In some states, defaulting on HOA fees could lead to your home being foreclosed upon. For example, in California, if dues have not been paid in more than 12 months or the amount owed is greater than or equal to $1,800, your HOA can begin foreclosure proceedings. In other states, HOAs are at liberty to start the foreclosure process regardless of how long dues have gone unpaid or what the outstanding amount is. If you are at all concerned about your ability to keep up with HOA dues in addition to your other expenses, it is likely in your best interest not to move somewhere with an HOA to minimize your chances of foreclosure. At the very least, you should find out what laws are in place in the state you’re looking to buy in regarding HOA foreclosures so you are aware of your rights and when you may be at risk.

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