How to Tell if an HOA Is Right For You (and What to Know Before You Join)

published Jan 30, 2024
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If you’re house hunting and condos or subdivisions are on your radar, you’ve probably scanned a listing and wondered aloud, “What is a homeowners association, exactly?” These governing boards are common in neighborhoods that started with one piece of land or one building that was then subdivided. 

They cover much of the maintenance and upkeep that’s usually expected of a homeowner, but that doesn’t mean they come without tradeoffs. There are positives, negatives, and lifestyle considerations to take into account before committing to living in an HOA community. Here are some to consider.

Quick Overview

What Is a Homeowners Association (HOA)?

An HOA is a legal governing board, nearly always made up of residents, that oversees, manages, and maintains a community like a condo building or subdivision. They are in charge of using HOA funds for upkeep, maintenance, and services.

What is an HOA?

An HOA is a legal governing board, nearly always made up of residents, that oversees, manages, and maintains a community like a condo building or subdivision. They are in charge of using HOA funds for upkeep, maintenance, and services.

Leo Peak, REALTOR®️ at Peak Family Real Estate Group, explains, “HOAs typically cover common area upkeep, exterior building and amenity maintenance, rule enforcement, and architectural guidelines. This involves maintaining shared spaces, managing amenities, enforcing aesthetic consistency and resolving disputes. HOAs also handle financial aspects, including collecting dues, budgeting for ongoing maintenance, and creating reserves for future needs.”

Residents of HOA communities will pay monthly or annual dues that are used for these ongoing expenses, and they may be asked to contribute to special assessments for larger repairs. They can be involved in the HOA or take a backseat and let other residents volunteer to steer the board. “Active engagement, through events, meetings, committees or boards, provides opportunities for contributing to decision-making processes. Staying informed is also crucial for homeowners to be aware of important community updates,” adds Peak.

What Are the Pros and Cons of an HOA Community?

Like anything, there are pros and cons to living in an HOA community. Some people love living in an HOA and relying on someone else to manage maintenance and community issues, while others steer clear of an HOA because they want the freedom to make any decision they want regarding their home.

Chelsea Werner, a global real estate advisor with Sotheby’s, says, “Some of the pros are that an HOA can provide a much easier lifestyle overall, and you don’t have to deal with the upkeep of your common spaces. You get the benefit of amenities like a pool and a gym. Plus, if something goes wrong within the building you are not solely responsible financially.” 

On the flip side, she notes that some people feel restricted by HOA rules, and decision-making can be difficult with an entire HOA board involved.

Peak notes another key benefit. “HOAs can be especially helpful when there are disagreements between neighbors. Having a set of rules and regulations that all homeowners have agreed to provides an easy point of reference for handling any issues.”

How Should a Buyer Approach Purchasing a Home with an HOA?

If you’re considering buying a home with an HOA, it’s a good idea to review the HOA documents with an attorney. These include the CC&Rs (Covenants, Conditions, and Restrictions), bylaws, minutes, and financial statements.

“Carefully read the CC&Rs and bylaws for information about the HOA’s rules and regulations, including any restrictions on what you can and cannot do to your property,” says Peak. He notes that you should check to see whether restrictions may apply to the common areas and shared amenities — especially if those are in contrast to how you plan on using the space.

Because the HOA is in charge of major maintenance, you need to make sure it has adequate reserves in place. Peak explains, “Review the HOA’s financial statements to ensure it is financially stable and has enough money in reserves to cover any repairs or maintenance that may be needed.” If the money isn’t there, you could get stuck with an assessment for a special project, like replacing a roof or repaving roads. 

Other things to note within the HOA bylaws include whether you can rent out your home, whether you can install certain types of appliances, and, if you have outdoor space, how that needs to be maintained.

How Do HOA Dues Work?

HOA dues are decided upon by the governing board, so they can range from under $50 a year to thousands of dollars a month. This amount often depends on what’s expected of the HOA, what’s included in the community, and whether the HOA is currently raising money for capital improvements. A condo building with a pool, common spaces, mail service, and a front doorman will have significantly higher dues than a subdivision where the HOA exists to enforce house colors and cover landscaping at the entrance to the neighborhood only.

HOA dues can increase when the board votes in support of an increase. They will determine the right amount to cover any upcoming costs and bulk up the community’s reserves. 

What Happens If HOA Rules Are Broken?

Everyone has heard the HOA horror stories. A house gets painted an offensive color and immediately receives an HOA letter. Someone installs a shed, and a warning from the HOA arrives. But HOAs don’t have to be all bad. “I always tell people to look at it as if they are all shareholders within the same company — you all have a common goal and vested financial and personal interest. It is important to come from that mindset rather than a combative one,” says Werner.

She explains that the HOA is required to have protocols in place for what happens if and when a rule is broken. “These offenses can be minor and lead to a fine or, on a larger scale, lead to eviction.”

But she recommends trying to work with the HOA rather than forging forward and breaking rules. Werner explains, “If you have an issue, try and figure out how to appeal to the invested interest of everyone and not just yourself. For example, if you want to do a large construction project but are getting pushback from the association, it may be helpful to show how your work will increase the resale value for your home and thus for similar lines down the road in the building.”