What to know if you are buying a home that belongs to an HOA

 

 

 

 

If you’re currently hunting for a new home, you’ve probably thought about whether you would purchase a property in an HOA. Chances are high that you’ve heard horror stories about a power-hungry board making life absolutely miserable for owners. But these stories don’t represent the experience that most HOA members have. 

Even if you weren’t purposefully seeking out a property within a governed community, you may not have to look far to find one. Roughly 25% of all houses in the United States are managed by community associations. The largest concentrations of HOAs are in the states with the largest populations, including California, Florida and Texas. 

HOAs are also increasing in popularity, even if not everyone is a fan of them. Developers are creating more HOAs every year. In fact, the percentage of newly built homes that belong to a homeowner’s association increased from 49% in 2011 to 67% in 2021. HOA numbers are growing fastest in the southern and western United States.

In short, it may become harder for Americans to find homes that do not belong to community associations. 

 Why do people move into HOAs?

HOAs can be polarizing; some people can’t imagine living in a neighborhood where they have to pay monthly dues and follow rules that may limit what they can do to their homes. But there are some notable positives to consider as well.

The fees that owners pay are used for many things, including maintenance. As a result, the neighborhood stays in great shape. The association may also take care of other taxing responsibilities such as lawn care, shoveling and roof maintenance.

Homes tend to sell for more when they belong to HOAs. Again, since the properties are so well cared for, the sellers can set a higher asking price. 

Then there’s the community leadership. Every HOA has an elected board to run the community, and many also hire a property management company to take on the day-to-day operations. These leaders may be able to assist owners if a crime occurs on the block or if another neighbor is breaking community rules.

Are people happy in HOAs?

For the most part, people who live in community associations are happy. The Foundation for Community Association Research studies homeowner satisfaction very closely. It released 2022 data that looked at how home buyers responded to homes in HOAs. 45% of respondents said they were more interested in homes when they learned that they belonged to a community association. 13% said they were less interested, and 41% said it had no impact on their level of interest.     

In terms of overall satisfaction, people who lived in HOAs said that they were happy in their community. 38% said their experience was very good, 28% said it was good, and 23% had a neutral experience. 

Matters to consider before buying a home in an HOA

If you’ve decided that you do want to become a part of an HOA, you will want to know about the HOA, its finances, rules, and much more. Get as much information as you can about the community before making an offer.

You cannot opt out of an HOA once you join

If you buy a home in an HOA, you are agreeing to become a member, follow all of the rules, and pay the fees. You cannot change your mind about being a member a year later. The only way to terminate your membership is to move out of the HOA.  

HOAs operate better with software

Some HOAs use management software, and a good platform makes life easier for everyone. A system like Condo Control helps owners do more for themselves. That includes paying fees, booking amenities, submitting requests, finding forms, and even submitting votes. 

But the board and management have the tools they need to conduct effective communication, complete tasks on time, and stay organized. 

That’s not to say HOAs cannot operate well without software, but you may have a better experience in a community that does use software. 

  

Governing documents vary from one community to another

Every community association has its own set of CC&Rs, bylaws and rules. Many share common rules, but they will also have specific rules that you may not agree with. For example, owners might not have the option to fly a flag on their front lawn, install a basketball net, plant their favorite flowers, or paint their door blue. These are little things, but they matter to a lot of people.

There are consequences for breaking community rules, too. If you are caught doing something that goes against the HOA’s rules more than once, you may receive a violation and a fine. In very rare and extreme cases, HOAs may even have the power to foreclose on a home.

Make sure to read the rules very carefully before purchasing a home in an HOA. 

HOA fees will increase

As mentioned earlier, all HOA members are required to pay fees or dues. This money is used to pay for staffing fees, insurance, maintenance, repairs, and other costs that come with running a governed community. These fees will increase over time, and your board may have to increase them on an annual basis (board members also pay fees, so it’s not a choice they are happy to make). The simple explanation for this is that costs go up. Contractors and insurers raise their fees, and materials become more expensive.      

On a similar note, inquire about what is included with the fees. Your community might have a pool and a golf course, but there is a chance you could pay extra for access to those facilities. 

HOAs can have problems with finances

Secure information regarding the HOA’s finances. Ask about any special assessments that were recently levied, how much is in the reserve fund, whether there is an emergency fund, and what types of major repairs are needed. HOAs can experience financial trouble if there has been a history of mismanagement, and the owners end up paying for it.  

Be careful about purchasing in a development that has low monthly fees. It sounds like a good thing, but it can lead to problems when the association doesn’t have enough money to complete repairs or pay bills. Underfunded communities either have to delay repairs, which can be a harmful strategy for the property or levy special assessments. If there is an urgent need for a large sum of money, owners could be asked to come up with thousands of dollars in a very short amount of time.      

The more involved you are, the more you will enjoy your neighborhood

HOA members do not have to attend social events or annual meetings, but there are benefits to being involved in your community. When you take the time to learn about HOA business and vote on that business, you are helping to shape your neighborhood’s future. You will also find more joy living in your area if you make friends. Some HOAs have committees, and joining one can be an excellent way to give back and meet people in your association without having to take on the same amount of responsibility as a board member. 

Conclusion

HOAs can be very attractive to some, but they are not for everyone. If you are interested in purchasing a home in a community association, make sure to do your research, learn about the community, and talk to current members if you can.