Should I Buy a Home with an HOA?
When buying a home, is an HOA a "yay!" or a "no way!"?
In the excitement of buying a new home, it can be easy to overlook the presence of a Homeowners' Association, or HOA. But an HOA can have a lot of influence over your purchase choice, including your monthly payment, the money you need to set aside for upkeep, the amount of maintenance work you do, or the things you can or can't do to your home's exterior and lawn.
Before you commit to making an offer, it's important to understand if the presence or absence of an HOA is the right fit for you, your budget, and your lifestyle.
What is an HOA?
HOAs aren't just for condominiums—an HOA can be formed within a single-family or multi-family unit community, and its primary function is to create the governing rules and regulations that determine how the community is taken care of. The HOA is typically run by a board of directors elected among the homeowners themselves, although some communities outsource the management of their HOA to private companies. The HOA creates rules and bylaws that homeowners must follow.
In a single-family home community, an HOA may be responsible for setting rules about architecture, any improvements or additions, changes of paint color, fencing, or parking of vehicles such as campers, trucks, or trailers. They may require certain sizes or types of landscaping, even if you are responsible for planting and taking care of it yourself. An HOA might care for common areas such as a park or playground.
In a condominium-style community, an HOA is typically responsible for the exterior of the buildings as well as the grounds. This includes things like maintenance of porches, decks, roofs, and siding, as well as lawn work and landscaping. An HOA can also provide for common areas and amenities, such as a workout center, pool, or community garden.
What should you know before you buy in a neighborhood with an HOA?
Before making an offer on a home with an HOA, you'll want to read the HOA's Declaration of Covenants, Conditions, and Restrictions (CC&Rs). This document details the rights of homeowners and the responsibilities of the HOA board members. This can tell you important information about any potential restrictions, such as the number of vehicles you're allowed to keep parked, or if you are able to rent out your home short-term.
What if you don't follow the rules of an HOA?
This is where things can get sticky. If you violate an HOA's rules, such as failing to pay your monthly fees, or maintaining your lawn, or putting up a dog run that doesn't meet the HOA guidelines, you can be fined.
If you fail to pay your fines, the HOA can take legal action and/or put a lien on your home. This is serious business—a lien will negatively impact your credit score and cloud the title of your home, making a future sale difficult. In some situations, an HOA lien can actually force a foreclosure sale of the home to recoup expenses.
The short version is, an HOA's regulations can have a serious impact if you don't follow them, so be sure you are on board with the rules and regulations before you commit to living in an HOA community.
Pros and Cons of an HOA
A well-run HOA can be an amazing benefit to prospective homeowners. Although there may be some expense and restrictions involved, the upshot is usually a well-maintained community with less work for the homeowner. An HOA can:
Set and enforce community rules—no need to argue with neighbors yourself
Protect property values by maintaining a cohesive and cared-for look
Take over maintenance tasks such as exterior painting, lawn care, landscaping, and shoveling
Provide and maintain services, amenities, and facilities such as parks, playgrounds, pools, and gyms
Not every HOA is a good one. Some can be expensive, have inconsistent rule enforcement, over-zealous board members, and rules that are heavy-handed. An HOA can also mean:
Set fees, dues, and assessments—there's no avoiding these, and they'll add to your monthly payment.
Restrictive regulations (such as forbidding bright-colored lawn furniture or children's play structures) that make it difficult to enjoy your home, your way
Inefficient operations, such as wasteful spending
Inept or amateurish management—not every board member may understand the importance of compliance, consistency, and the legal responsibilities of an HOA
When it comes to HOAs, there is no right or wrong answer—only the one that fits best for you and your family. Be sure to do your homework, check your budget, and think carefully about how an HOA will impact your enjoyment of your home and your property value.
At Lennar Mortgage, we understand that a home is not only one of our most valuable assets, but also where we find peace, sanctuary, and enjoyment with those we love. To learn more about buying a home and our Lennar communities, visit our website.