A Home Owners Association, or HOA is an organization in a planned community, subdivision or condominium that implements procedures and guidelines for all the homes in that area. The main reason for a home owners association is to keep the property values high by carrying out the community’s rules and regulations and by maintaining common areas. Once you purchase a home in a community with an HOA, you automatically become a member and are required to pay HOA fees that contribute to the general upkeep and supervision of the community.
Each association is founded by the real estate developer to manage their designated communities. The HOA has the power and authority to enforce and oversee restrictions and conditions. Most HOAs will have a document called the Declaration of Covenants that sets the rules and conditions for the home owners.
Living in a neighborhood with a homeowner’s association has its advantages and drawbacks. For example, the HOA dues could be very pricey and drive up your monthly costs, but on the other hand it’s a huge advantage to be able to have the use of common areas such as pools, playgrounds, clubhouses and parks.
Below are some pros and cons of an HOA to aid you in deciding if a homeowner’s association managed community is right for you.
Pro – Increased Home Value
Living in a community with an HOA can really increase the value of the homes in that neighborhood. The HOA creates rules and regulations that all homeowners must follow. This way, one or two home owners in the neighborhood don’t have the ability to negatively impact the home value of the other homes in the neighborhood.
Con – Strict Standards for Your Property
One disadvantage to living in an HOA community is that the organization governs what is an appropriate design and look for your property. Your home’s decorative design during the holidays, paint color scheme, landscaping, and car parking may all be regulated by an HOA.
Pro – Amenities
Depending on the monthly cost, most HOAs provide the neighborhood with amenities like pools, tennis courts, basketball courts, playgrounds, clubhouses and guard gates. Often, HOA fees are used for maintaining the grounds and common areas, boosting the look and enjoyment of the community.
Con – Falling Behind on HOA Dues Can Lead to Legal Action
Before purchasing a home in a neighborhood with an HOA, it’s imperative that you make sure the HOA fees are in your budget. Laws vary by state but an HOA can actually take legal action against you if you fall severely behind in paying your HOA dues.