When you’re in the market for a new house, one of the many decisions you’ll have to make is whether or not you want to live in an area governed by a Homeowners Association. Now, the good news is that the very presence of a Homeowners Association (HOA) will not make or break your ability to use a VA Loan for your mortgage—as long as everything with the HOA is “on-the-up-and-up,” you shouldn’t run into any issues. That does not mean, however, that a HOA having a hold over your potential new property is something to disregard completely.
Read on for more information about Homeowners Associations: what they are, what they do and why you so often hear about residents butting heads with them!
“What is a Homeowners Association, anyway?”
A homeowners association is an organization that essentially manages the homes in a certain neighborhood, subdivision or even condo complex. The people who live in the area governed by the HOA are all considered “members” of the association, but most of the decisions are made by a board of at least three people (President, Secretary and Treasurer) who live in the community and agree to act in its best interest. Board positions are filled on either a volunteer basis or through elections. Though they’re considered “corporations” from a legal standpoint, the members of the board do not receive a salary—some officers might receive a stipend for their work, but most positions within the HOA are unpaid. More often than not, members of the association join the board out of a desire to make a difference in their neighborhood.
It is worth mentioning that membership in an HOA is not free. Community homeowners are required to pay monthly fees, usually referred to as “dues,” to the association in order to stay in good standing (we will explain why in just a moment.) The amount you’ll have to pay in dues varies between communities, so it’s definitely something to research and take into account when you’re considering buying a house in a certain area.
“What do Homeowners Associations do?”
HOAs serve two main functions:
(1) To take care of common areas. Most of the money collected by the HOA as monthly dues goes toward maintaining public areas in the community. If your neighborhood offers amenities like a pool, park or playground, then it’s usually up to the HOA to make sure that these facilities stay in working order. The HOA may also handle things like fixing damaged sidewalks, hiring a waste removal service and clearing snow and ice from walking paths.
(2) To keep property values in the community high by enforcing certain standards of appearance. When people are house-hunting, they don’t just look at a property on its own; they also take into account the condition of the surrounding area. If the neighborhood looks neat, tidy and orderly, then folks are more likely to make an offer—and possibly pay more if that’s what it takes to “seal the deal.” However, if the other homes in the neighborhood look derelict, bizarre, or otherwise sketchy, then they will likely want to take their business elsewhere. If a specific house looks very nice but is sandwiched between one house that looks abandoned and one that’s painted florescent green and purple, then the owner of the nice house will probably have to take a much lower offer if they ever want to sell it. HOAs attempt to prevent this situation by enforcing what are known as Covenants, Conditions and Restrictions (CC&R). These are an HOA’s specific policies related to the façades of neighborhood houses and how a homeowner’s property may be used. Common rules include a maximum height on grass and shrubbery, lists of what can and can’t go on a front lawn and color scheme regulations.
Most people are happy to enjoy service #1, but #2 tends to come with some controversy. HOAs generally require homeowners to get permission from the association before they do major work on the exterior of their homes, and the HOA can veto the project if they have a problem with it. Granted, hanging a wind chime on your front porch probably won’t cause an issue, but things like painting the house a different color or replacing a wooden fence with a wrought-iron one might land you in hot water. Also, HOAs are not above sending residents strongly-worded letters telling them that their grass is too tall, that their child’s playhouse needs to the go in the backyard, that their Halloween decorations need to be put up because it’s almost December, etc. And if homeowners don’t “fall in line,” they can face heavy fines, denial of amenities or even legal action.
“What gives a Homeowners Association the right to tell me what to do with my property?”
When you buy a house or condo in a neighborhood or subdivision that has a homeowners association, you’re usually required to join the HOA—it’s just one of the terms and conditions of living in that area. And when you join an HOA, you agree to abide by their regulations, and that includes following their rules about how your property must be maintained. So, to answer that question…you gave them the right.
Now, are CC&Rs always fair? Well, they’re “fair” in the sense that everyone who lives in the neighborhood must abide by them. If you want to paint your front door blue but the HOA says “no,” it’s extremely unlikely that they’ll give your neighbor permission to paint her front door blue. However, when many people claim that HOA policies are “unfair,” what they really mean is that they think certain policies are “unreasonable.” Broken furniture on your front lawn is probably something that we can all agree crosses a line…but what about yard signs supporting a specific politician? Foot-tall grass is pretty universally disliked, but what about xeriscaping? “Rust bucket” cars on cinderblocks on a person’s front lawn are an eyesore, but can the same be said about cars with bumper stickers or decals that are parked in the street? These are all things that might cause a homeowner to clash with their HOA. Add in the fact that rules often aren’t enforced consistently (either due to an oversight or favoritism), and you’re looking at the potential for power struggles.
Final Thoughts (For Now)
Are homeowners associations inherently bad things that you should steer clear of while shopping for a house? Should you reject a specific neighborhood outright because it’s under the jurisdiction of a HOA? No, certainly not. For all of their negative press, HOAs are usually forces for good in the community. You may not like being told that you can’t hang a basketball hoop on the outside of your garage or park your truck in your driveway, but if your property values stay high because of the neighborhood’s “tidy” appearance and pristine amenities, you might want to give the HOA some credit!
Will you always agree with your HOA’s policies? Probably not. Are there HOAs that stick more closely to the letter of the law than the intent of the law? Sure. Can you fight your HOA if you disagree with something in the CC&R, think that rules are being enforced arbitrarily and unfairly, or even feel that the board has become oppressive and tyrannical? Maybe.
But that’s a topic for another day…