Homeowner’s Associations (HOA’s): Are You In or Out?

If you’re currently in the “sell the old house, find a new one” kind of journey, you’re most likely going to come across HOA’s. Depending on your spending habits (and financial capability), Homeowner’s Association (HOA) fees might be something you don’t want to see when counting up the elements of your living expenses.

One might think “I didn’t sign up for this,” but one look at the contract would show that you may have agreed to it without you seeing it. How do you know if you’re going to be under the rule of HOA’s? Is there any escape? Are they really villains as this paragraph suggests? Let’s find out!

Disclaimer: As with all of our guides here, do understand that each location is different from the other, so your mileage may vary. Some lawyers specialize in this area, so if you have a troubling itch in this topic, you might want to get a professional to scratch it for you.

Never Heard of HOA’s? 

Don’t worry, it’s not so uncommon to find someone who hasn’t heard of HOA’s. There’s a reason why our title asks a question about it. Before we answer it, it’s essential to understand what Homeowner’s Associations are and why they ask for your money.

You can think of HOA’s like a tiny government body in your neighborhood or condominium building that is ruled by the people and is for the people. It’s headed by a board that works with each other to enforce certain rules and regulations in the area it governs. While that sounds like your strict teacher in middle school, they’re also responsible for providing amenities for the residents such as community pools, country clubs, and tennis courts. Depending on your HOA, they could give the people the benefit of having parking space, hiring personnel for snow removal, and have trucks come over regularly for trash collection. A portion of the fees you pay allows the HOA to keep giving the residents access to these amenities and benefits.

Not for You?

Don’t want to pay those pesky fees? Then factor this into your research when looking for your next home. If the property you’re getting is in a neighborhood that already has a mandatory HOA in place, there’s no way for you to opt-out.

“Mandatory HOA’s?”, you say? Yes. There are two kinds of HOA’s: voluntary and mandatory. A voluntary HOA, as the name suggests, is something you can choose to join or ignore. For example, if you’re moving into a condominium building and choose to abstain from the HOA, you might not be able to use the gym on the third floor or have a lovely swim with the kids on the rooftop. In some cases, they may still allow you to use the amenities but at a price for each instance.

Unless you’ve already purchased the property before the HOA is formed, there’s no stopping them from being involved in your life. So, if you don’t want people breathing on your neck because you didn’t mow the lawn for a while, you might want to buy a property in a location that doesn’t have them there.

Someone’s Forcing Me to Do Household Chores?

As mentioned, Homeowner’s Associations impose restrictions that come in the form of “Covenants, Conditions, and Restrictions.” (Note: we think they use the word “Covenants” to sound imposing.) Here’s a list of the things that you could expect:

• Limits on how many pets you could own (even including how big your pets could be)
• Limits on how many people you can have at home overnight (if they even allow it)
• House design restrictions (such as prohibiting certain materials or color of paint)
• Noise limits (especially in neighborhoods that attract tourists)
• Basic maintenance, such as keeping the lawn tidy.

This list is not extensive, but as you might have noticed, most of these pertain to keeping all the houses (or units) in the area to look as good as possible. Yes, they do sound like that strict teacher from middle school, but later in life, we realize that they were probably just trying to keep everyone in order.

These regulations “regulate” the community, so that the area doesn’t eventually turn into a wasteland. If you think that doesn’t concern you, it might be good to know that keeping the neighborhood a fantastic place to live in helps increase the property’s value over time. Moreover, it could give you a sense of security to know that you’re in good hands.

We Don’t Live in a Perfect World

These benefits sound great and all, but how sure are you that the group keeps everyone’s best interests in mind? Homeowner’s Associations are indeed run by the people, but there’s a board of directors at the top. The people that make up this board may not necessarily be experienced with running a residential area, so the results may not be what you’d expect.

A gap in leadership is a can of worms. One of the most dangerous consequences of poor management of the HOA is an inefficient use of funds. Wasting a lot of resources may lead to a drought of money, causing the board to ask for more. Others might realize the unwise execution of the group and forcefully stop paying the fees (especially if the HOA isn’t that good with collection). If they’re not paying, why should you keep the town running on your own?

We focused on leadership issues, but the other factors mentioned, such as residents refusing to pay the board asking for extra funds (which they can do in emergencies), are instances that can very well happen in any HOA. In our example, it sounds like the HOA should be taken out, which can happen, but it’s a topic for another day.

We hope this information aids you in choosing your next home. If you’re still in the middle of selling your house, we understand that the process can be burdensome and long. Once things have settled down your hard work will pay off. If it helps, we’d like to offer Shorefront Investments services to you. We’ve been in the business of providing homes for people for a few years now.

What do we do? We buy houses, even in as-is conditions. A lot of people just want the sale to be done as soon as possible and don’t have the time to deal with the renovations and home visits. If you think this is something you want, give it a shot! You can give us a call at (850) 713-4866, send us an email, or fill a form on our front page.