What is an HOA?
It is often said that you're buying more than a home, you're buying a neighborhood. Nowhere is that truer than in neighborhoods governed by a homeowners' association (HOA).
Homeowners' associations are nothing if not controversial. Some residents appreciate having, in essence, a hyper local government that enforces rules to protect property values and maintains the neighborhood's common areas. Many HOAs even provide services like lawn mowing, snow removal, and trash collection.
Others aren't as warm to the idea of a committee telling them what they can and can't do with their property. HOAs can set restrictions on what color you paint your house, how tall your fence can be, and what kind of pets you can have. And if you don't pay your HOA fees, the punishment can range from being barred from the common areas to, in extreme and rare circumstances, taking possession your house. If you search "homeowners' associations", Google suggests you finish it with "are evil."
While condemning stories about HOAs permeate the media, the reality is much brighter. In a recent study by the Community Associations Institute, 80% of respondents reported being satisfied with their association.
Yet for some, living under an HOA combines the worst aspects of renting with the expense of homeownership. For others, the HOA brings consistency to the neighborhood's aesthetics while providing time-saving services - like a fashion cop armed with a lawn mower.
Joining an HOA is not optional. The purchase of your home automatically makes you a member of that HOA, binding that homeowner the rules of that community. These rules, called covenants, conditions, and restrictions (CC&Rs), should be made available to you either online or in person. It's not a bad idea to have your lawyer take a peek too. If you break any of these rules, you will, of course, have to pay a fine.
So who is this mysterious HOA? When a developer begins building a community, the developer will appoint members to oversee the HOA's duties. As more and more residents move into that community, the developer will gradually cede control to elected homeowners. Once the community is complete, the builder hands over all control to the elected homeowners. This is what makes HOAs so effective. They're made up of your neighbors who have as much of an interest in maintaining the community as everyone else who lives there.
Depending on the community and HOA, fees can range anywhere from a few hundred dollars to several thousand and is paid either monthly, quarterly, or annually. Typically, the larger and more lavish the community is, the higher the HOA fees will be. If you move into a luxurious high-rise condo building that offers elevator access, concierge services, a clubhouse, swimming pool, tennis courts, the works, then the HOA fee includes the upkeep of all of these upscale amenities, costs that are passed along to the community's residents.
If you like the idea of never having to mow your lawn or shovel your driveway, then an HOA-governed community is what you want. If you see terms like "low-maintenance" or "maintenance-free" in the listings descriptions, then that community is under an HOA.