For better or worse, home owners' associations are becoming the norm in many areas across the country.
A homeowners association, known as an HOA, is s a private organization that members of the community or neighborhood govern. Members are usually volunteers and meet quarterly.
The primary purpose of an HOA is to ensure that the community appears orderly and attractive to increase or maintain property values.
The HOA will create and enforce rules known as Covenants, Conditions & Restrictions (CC&Rs).
Each community member will agree to abide by these rules before taking ownership of their homes. Failure to comply with these rules will result in fines or loss of community privileges, and in extreme cases, a lien could be placed on the home. Some common limitations you may see in a community's CC&Rs are:
No overnight parking on the street.
Restrictions on when holiday decorations may be displayed.
Homes may not be used as short-term rentals
Limits on exterior paint colors or landscaping.
Living in a community with an HOA has many benefits.
One of the most attractive benefits is that HOAs usually fund a community center that may have amenities like a pool, tennis courts, basketball courts, and other common areas that can be used for event gatherings. The community pool is usually the most significant draw since building and maintaining a pool can be quite expensive.
Another benefit is that homeowners have the reassurance that their neighborhood will always be well-maintained, which translates into higher property values.
HOA neighborhoods tend to have a stronger sense of community pride which is also beneficial to homeowners.
Lack of freedom to do whatever you'd like is often cited as the number one disadvantage of living in an HOA.
A homeowner likely won't be able to park their huge boat in front of the house or leave their Christmas lights up year-round without getting fined. Fines and fees are other complaints.
Homeowners must pay a fee, usually monthly, to live in the community. This is in addition to their mortgage and property taxes. Fees can vary based on where the community is and what they have to offer. Usually, the more amenities, the higher the fees.
Some homeowners do worry that HOAs have become too strict and overstep their boundaries. Since the HOA is made up of community members, it is important to attend meetings to voice concerns and stop any overly invasive rules from becoming part of the CC&Rs.
It is also important to keep pressure on the board members to properly maintain the budget so that your fees are going to good use.
The HOA can't kick you out, but they can place a lien on your home. It is extremely rare, but it has happened. Usually, it happens for failing to pay monthly fees, which gets charged late fees and interest becoming very costly for the homeowner.
In extreme cases, the HOA does have the authority to initiate the foreclosure process, but again, this does not happen often.
Depending on where you live, it may be inevitable to live in a community with an HOA. They have become more common in single family neighborhoods. If you've never lived in a neighborhood with an HOA, it may sound constricting and worrisome at first, but most residents do not have trouble adapting to the community-owned aspect of an HOA.