The good and bad of a Homeowner’s Association

For those who have looked for a house or own a house, many have either good or bad feelings about a Homeowner’s Association.  There are advantages and disadvantages of being in an HOA so I thought I would talk more about why you would look for one in a home search and why it needs to be avoided.

Here is what the great Wikipedia says about Homeowner’s Associations (Click here for the full link): A homeowners’ association (abbrev. HOA) is the legal entity created by a real estate developer for the purpose of developing, managing and selling a community of homes. It is given the authority to enforce the covenants, conditions, and restrictions (CC&Rs) and to manage the common amenities of the development. It allows the developer to legally exit responsibility of the community typically by transferring ownership of the association to the homeowners after selling off a predetermined number of lots. Most homeowners’ associations are non-profit corporations, and are subject to state statutes that govern non-profit corporations and homeowners’ associations.

Basically what it involves is a group of people within your neighborhood who either step into or get voted into positions of authority.  Some HOAs meet frequently while others have yearly meeting.  They approve what colors you can paint your house, push for a neighborhood yard sale, and other issues dealing within your certain neighborhood.  Here are some of the good things that an HOA can bring to the table if you live in that neighborhood:

Keeps neighborhoods clean
What I mean by that is I have seen many, many houses in non HOA neighborhoods with broken down cars in their lot.  While that is their choice as a home owner to leave those out front, is that what you would want to see next door as a neighbor?  The HOA will also remind members that they need to shovel within a certain amount of time, which is especially important if you enjoy going for walks during the winter.  Some also have restrictions on RV and boat parking.  There are certain rules about those.

Keeps neighborhood consistent
The HOA can approve or deny the colors that you plan to paint your house.  Again, this does depend on the actual HOA itself so keep that in mind.  I know if my wife and I want to change the colors to our house, we have to first get it approved by the HOA.  I can’t say I know what we would have to do but I know we would have to at least speak with them about it.  While this does restrict some creativity, it keeps the neighborhood from having some strange colored houses.

Works on improving the landscape of the neighborhood
The board of HOA members do deal with watering community property.  They are the ones that have to pay for it so they have to figure out how often grass and trees need to be watered.

Makes the area more of a community
The HOA may try doing small things to help unite the people throughout the neighborhood.  As mentioned above, it could include neighborhood garage sales or even something like cheap tickets to the baseball game.  They want the neighborhood to have a family feel through it and they may think this helps.

Out of those, I think the main advantage why my wife and I wanted to be in an HOA is because of keeping the neighborhoods clean.  Here are some reasons why getting a house out of an HOA would be beneficial to you:

Save money
Regarding our HOA, we only had a one time $250 deposit to join it and have to pay nothing else in future years.  I have seen houses that pay between $30 to $60 per month in HOA fees (This is not counting townhouses that have their lawn care taken care of, which can be much more expensive).  While that may not seem like a lot of money, my family looked hard at a house that had an HOA fee of $50 per month.  With this being our second year in the house, that would have been another $1,200 in fees.  That is on top of mortgage, property tax, PMI, and anything else that they throw at you when moving into a new house.  I hope they would have been working hard for that big of a chunk of money.

More freedom
If you want to park your car in your lawn or paint your house neon green, living outside of an HOA gives you the opportunity to do that.  It really does give you more freedom and the choices to do whatever you want with your RV and boat.  The restrictions of an HOA really are not for everyone so living outside of it may be better for some.

You really only have to worry about yourself
Without anyone needing money to water a neighborhood park, all of your money goes to you.  You are not having to worry about other people, especially if you have no idea what exactly they are watering.  You can focus on putting that money every month into your own lawn and fixing up your house.

An HOA really should become a factor in your house search.  But if you find that perfect house and you disagree with the covenant that the HOA currently has, it may be tough to change it.  Most real estate websites do list if it is in an HOA and the monthly costs for it.  Think about that when looking for a home and doing your searches online.