When searching for your next home, the neighborhood or community you choose matters when it comes things like affordability and its proximity to work and the right schools for your kids.
If the neighborhood you like best is governed by a homeowners association, you'll have a few more factors to consider, from the additional monthly cost involved to whether you’ll be willing to abide by certain rules. First, it’s important to understand exactly what a homeowners association does.
What Is an HOA?
A homeowners association, or HOA, is a group of all the homeowners in a defined area. It'srun by a board of neighbor volunteers that oversees services such as the maintenance of common areas, regular trash pickup and snow removal, and it establishes and enforces community rules.
HOAs are common in communities constructed by a single developer. The Community Associations Institute estimates that about 69 million people in the U.S. live under a community association, which includes HOAs of single-family houses, condominium associations, townhomes, master-planned communities and cooperatives.
All HOAs are nonprofit corporations initially created by the developer who establishes the subdivision. The developer agrees to form an HOA in order for the local city or county to agree to the planned neighborhood and ensure basic services are provided for residents. A group of neighbors can form an HOA for an existing community as well, although they're more likely to be voluntary and serve more of a social and political role than an HOA that organizes utilities and other services.
If you’re considering buying a home that’s part of an HOA, you may find that you love the additional services the community provides and the subsequent boost to your property value, or you may find that the rules and regulations many HOAs establish to be restricting. When you buy a home in an HOA community, you’re agreeing to abide by the rules and pay dues as decided by the governing body. Here are five things to know before you close on the deal.
1. Read the rules.
When an HOA is created, the developer establishes a declaration, which is “sort of like the constitution for the community association,” explains Andrew Fortin, senior vice president of external affairs at Associa, a homeowners association management company. To accompany the declaration, the first bylaws are written by the developer.
Eventually, the developer will turn over management of the HOA to the homeowners, represented by an elected board of volunteers within the community. The board can discuss and propose changes to bylaws, establish the annual HOA budget and choose vendors for work throughout the community.
All homes built under the HOA are forever tied to the association, which means if you purchase a house that’s part of an HOA, you are agreeing to comply with the rules regardless of whether you think they make sense. You may need permission to put a shed in your backyard, or you may not allowed to paint your front door blue, for example. If you’re not willing to follow the rules, your best option is to buy a house elsewhere.
You do have the opportunity to know what you’re getting into ahead of time, however. “Prior to me buying in a community association, I get, or the seller is required to give me, a stack of documents related to that association. So I get a copy of the declaration and the bylaws and the budget and all the things that are going to be relevant to me in assessing if this is going to be the right community for me,” Fortin says.
In many cases, rules enforcement is lax and board members are mainly focused most on ensuring residents receive utilities and regular municipal services. But some HOA bylaws can be limiting – and they can also be cost-prohibitive.
2. Know what you have to pay.
Depending on the size of your community and its amenities, monthly HOA fees can be as low as $50 per home or reach beyond $1,000.
Costs vary based on what services the HOA needs to organize. For example, if your sewer maintenance and trash collection are paid for separately, your HOA dues don’t have to cover those services. Some subdivisions need only utility and maintenance care. Others focus more on making the space feel like an exclusive community, with tennis courts and gatherings maintained and planned with dues.
You’re required to pay all dues established by the HOA, even if you don’t take advantage of things like common areas. If you refuse to pay, you can find yourself in a heap of financial issues, including a lien on your property that can keep you from selling your house before paying off the debt.
In California, for example, in the same way a bank can pursue foreclosure when a homeowner doesn't pay his or her mortgage, “the associations have that same power” when a homeowner hasn't paid dues or otherwise owes the HOA money, explains Steven Tinnelly, managing partner of Tinnelly Law Group, a California law firm that represents community associations.
If you find yourself owing money to the board for another reason – because you damaged a fence or sign, for example – you’re liable for those costs, too.
“Let’s say a homeowner does something to damage the common areas. The association has to fix it, and then go after the homeowner to recover those costs,” Tinnelly says. You're also required to pay fines you rack up by violating bylaws, such as renovating without permission.
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3. Inquire about your HOA’s legal power.
Most states have laws clearly defining the role of an HOA that areoften adopted from recommendations in the Uniform Common Interest Ownership Act, created in 1982 by the Uniform Law Commissioners, a nonpartisan group of attorneys that established the general legislation for HOAs and have regularly maintained it since. The uniform law includes guidelines for holding HOA board elections and what bylaws may or may not prohibit.
“It’s very comprehensive,” says Dawn Bauman, senior vice president of government and public affairs at Community Associations Institute. “Then some of the states adopt certain versions of that. They don’t usually adopt it wholesale because it can be quite cumbersome.”
Even with states defining an HOA’s autonomy and restrictions, some homeowners naturally oppose their community association. And in some cases, if state law guarantees the HOA rights that an individual doesn’t agree with – like rules preventing you from parking on the street overnight or painting your house a certain color – it becomes proposed state legislation rather than a fight between the homeowner and the association.
According to CAI, an average of 1,000 to 1,500 pieces of legislation regarding community associations are introduced each year in the U.S. But if you’re looking for a simple fix to an HOA bylaw you don’t like, advocating for new state law isn’t the most direct way of enacting change in your neighborhood. Becoming an active member of your HOA is more likely to help you achieve the change you want to see, as long as your argument is compelling to your neighbors.
[Read: The Guide to Buying a Home.]
4. Pay attention.
Once you’re living under an HOA, it’s important to pay attention. You not only want to know the existing HOA rules before you take ownership of the house, but you also want to read the minutes of previous and upcoming board meetings to know what’s going on.
If board meetings are open for all members to attend or there are occasional public forum meetings, it’s important to attend and be able to weigh in on future decisions. HOAs often only feel restrictive when you aren’t aware a decision you don’t like has already been made.
Having a dispute with the board is probably the biggest concern for most homebuyers considering a property under HOA jurisdiction, but the number of property owners who report being dissatisfied with their HOA is in the minority. A survey conducted by CAI in March 2016 found that 65 percent of community association members reported their experience living in an association as positive.
5. Get involved.
The best course of action to ensure you support any moves your HOA makes is to get involved yourself. Running for a board or committee position will help you get to know your neighbors better, and if you’re elected, you’ll have a key role in ensuring all voices are heard. Not to mention that you’ll have a say in rules and policies to ensure they improve the community and increase property values without overreaching.
Don't let your house fall behind.
Every homeowner knows that maintaining a house is hard work, and few have the time, money or willpower to keep their home looking perfect at all times. When it’s the peak of home selling season, it may seem like half the houses on your block are in pristine, market-ready condition, or they’re under construction and will look fresh and new in no time. How can you keep your house from becoming the worst-looking house on the block, or letting it fall behind on updates? It may seem like an impossible task, but it's one all homes face eventually.Take stock of your aging home.
Take stock of your aging home.
Even if it seems like every house in your neighborhood is getting a fresh interior, exterior or is newly built, the typical house has at least a few decades under its belt. “U.S. housing stock is aging, and especially in city centers and areas of urban density,” says Holly Tachovsky, CEO of construction information company BuildFax. So don't feel so bad about your chipping paint and dated entrance, but know that maintenance and renovations are key factors in ensuring your home will hold value and last for generations. Read on for tips on keeping your house updated as your neighborhood changes.Attend neighborhood open houses.
Attend neighborhood open houses.
For your house to increase in value along with other houses being built or renovated in the neighborhood, it needs to be on par with the updates. An easy way to know what you need to do to keep up with the Joneses is to attend open houses when a nearby property goes on the market. Listing agents expect curious neighbors to pop in, and it’s a great opportunity to see what the interiors look like and compare them to your home. If houses selling for top dollar in your neighborhood have new kitchens and master suites, you may want to put kitchen and bathroom renovations on your to-do list.Get a green thumb.
Get a green thumb.
Don't let your house get a reputation as the worst on the block by neglecting its curb appeal. Keep the siding clean and consider repainting, and maintain the grass and landscape to keep the house looking fresh from the road. Kris Kiser, president and CEO of the Outdoor Power Equipment Institute, says relandscaping your yard also gives you the opportunity to select flora that work best for the climate, your property and the amount of time you have to maintain it. “Put the kinds of plantings in place that will hold your dirt in place, that will grab and capture and filter rainwater, and put in flowering plants,” he says.Make minor updates.
Make minor updates.
Keeping up with other houses in the neighborhood doesn’t mean every project has to be a big one. Small updates to keep your home looking well-cared-for, like fresh paint in each room or new doors on cabinets, can make a big difference. Dan Tarantin, president and CEO of Harris Research Inc., the parent company of N-Hance Wood Refinishing and Chem-Dry, notes that refinishing hardwood surfaces can achieve a new look at a far more affordable price than replacing materials throughout the house every time you want to update. “That is a way to allow people to be able to do all the projects at once, because of the cost and the convenience,” he says.Maintain, maintain, maintain.
Maintain, maintain, maintain.
The key to keeping your house from being a teardown candidate when you decide to sell is to maintain the basic systems, care for the property and ensure it runs properly. Tachovsky says regular maintenance is necessary to keep houses from falling apart: “They constantly need that upgrade, and if they’re maintained well over the life of a structure, the structure can be useful for a long time.” From the roof to siding, electric and plumbing, keep an eye on the age of systems and have them serviced regularly. Otherwise, she says, your home is “going to show its age pretty profoundly.”Get the most out of what you have.
Get the most out of what you have.
With proper care and maintenance, you should be able to get the full life out of major appliances and systems, such as your HVAC, and the same goes for floors, cabinets, outdoor walkways and furniture. Have your carpets cleaned, consider placing a rug over hardwood floors that get the most foot traffic, pull weeds around the driveway and sidewalk and clean your furniture regularly so the natural oils from people and pets don’t set in and cause long-term damage. Even if you’re sick of your kitchen's appearance, you don’t have to demo the entire thing. Consider quartz countertops to replace laminate, or put a new finish on existing cabinets to can make them look new. With a little work, “we’ve seen people fall in love all over again with their kitchens,” Tarantin says.Don't be afraid to freshen what you've updated.
Don't be afraid to freshen what you've updated.
Especially if you’re planning to remain in your home for 10 years or more, even the most on-trend master bathroom or living room can look completely dated when you sell. Investing in a bathroom update now will likely give you years of use, but don’t be afraid to update again as your needs change or the space’s age starts to show. Kiser points out that making changes over and over again is particularly easy with landscaping. “You can move this and move that” until you achieve the look and functionality you’re hoping for, he says.Improve for more than ROI.
Improve for more than ROI.
Don’t spend all your savings trying to match new builds or flipped houses if you can’t enjoy the updates. Plenty of homebuyers are planning to make changes to a house they buy anyway. From 2010 to the start of 2017, post-sale home remodels increased by 54 percent compared to the previous seven-year period from 2002 to 2009, according to BuildFax. Tarantin says hardwood floors, for example, are often a preference among homebuyers, but they're only worth the money if you’ll enjoy the look as well. “If you’re thinking about selling your home in the near future, and you’re thinking of installing hardwood floors because of saleability, our customers tell us it’s not worth it,” he says.Read More
Updated on Nov. 28, 2018: This story was originally published on Sept. 8, 2016, and has been updated to include more recent information.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at firstname.lastname@example.org.