What Are Homeowners Associations?

Homeowners associations. For some of us, they’re not a big deal. But, some people really get nervous about buying a home where there is a homeowner’s association.

Owning your home is all about getting to do what you want with your property. So why would you want a homeowner’s association getting in the way of your plans for your home?

This post will tell you about homeowners associations, what they do, and how they work. I’ll also share with you the pros and cons of a homeowners association and how to detect a strong HOA vs. a weak HOA.

What Is A Homeowners Association?

A homeowners association, also known as an HOA, is a collaborative governing body of a subdivision or neighborhood. Each of the property owners are members of the association. Most HOAs elect leaders, or board members and an executive committee with a president, vice president, secretary, and treasurer.

A homeowners association is also sometimes called a property owners association, also known as a POA.

What Does An HOA Do?

An HOA or a POA has several functions. The main function is to enforce the covenants and restrictions in the subdivision. Also, the HOA approves additions and changes to homes in the subdivision.

HOAs also take care of community areas. Some subdivisions have playgrounds, parks, retention ponds, or signs and landscaping at entrances. These need to be maintained in order to continue looking good.

HOAs also consider taking on projects. Currently as I write this, the HOA where I live is considering adding street lights at the entrances. This is to improve safety at the entrances.

Lastly, HOAs monitor and account for the collection of dues. Dues help to pay for the maintenance of common areas and projects.

How Do Condo Associations Work?

Condo associations work in the same way as an HOA for a subdivision. HOAs are even more important in condo or some townhome complexes. This is because as an owner of a condo you own a fractional share of all of the common areas of the complex. With condos, this can account for a meaningful amount of the value of your property. Maintaining and improving the property is important to protect your investment’s value.

Pros Of Homeowners Associations

1. Better maintenance of the neighborhood
2. Maintaining standards in the neighborhood
3. Maintain a homogenous, common look throughout a subdivision, which is good for maintaining and increasing property values
4. Enforcement of rules to eliminate nuisances and blight in the neighborhood

Cons Of Homeowners Associations

1. Annual dues which can be costly
2. Being required to ask permission to make some changes to your home. This is often limited to the exterior of your home.
3. Leadership can become overbearing and take rule enforcement too far.

Should I Buy A Home With An HOA?

You shouldn’t automatically ignore a home just because there is an HOA. Instead, find out more about the HOA. I like to think of HOAs like this: there are lions and there are kittens. It’s all about the size of the teeth.

If you see a home for sale and there is an HOA, ask your real estate agent for a copy of the covenants and restrictions. These will tell you two things. First, the covenants and restrictions will tell you about the structure of the HOA such as whether it has a leadership board and president. These will also tell you about how much the dues are and how much they can increase each year.

Secondly, the covenants and restrictions will tell what the rules are in the subdivision. This will include what improvements require approval by the board and other requirements such as the number of trees you must have on your lot.

Some subdivisions get pretty extreme. I once sold a home in a subdivision where if your grass got too long you were ticketed. Yeah, that is pretty extreme. Then, there are HOAs like where I live that are mainly designed to maintain a relatively homogenous aesthetic which is actually a really good thing.

Conclusion

Homeowners associations are generally a good thing and are meant to maintain the quality of a subdivision. Fees are generally low and the covenants and restrictions are usually pretty tame. However, there are instances of more intrusive, costly HOAs. Reviewing the covenants and restrictions with your real estate agent is a great way to determine the strength of the HOA and how it will affect you.

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