What Is a Homeowner Association?
A homeowner association (HOA) is a corporation that real estate developers can choose to form to help market, manage and sell homes or lots in subdivisions. The developer has rights and privileges to enforce certain rules on residents of the subdivision affected by the homeowner association.
Such corporations have grown increasingly more common since the 1960s. The Community Associations Institute trade association estimated in 2010 that 24.8 million American homes were governed by HOAs.
It’s important to understand that a homeowner association’s power resides with the home itself and not the homeowners. For example, if an owner sells their home, they cease to be a member of the HOA and the new owner takes their place.
If you’re looking for a real estate agent, consider that some sell homes in HOA-regulated areas. Before you choose a house governed by a homeowner association, consider the pros and cons.
Disadvantages of HOAs
- Strict regulations: You might not have the final say on the color of your home, landscaping choices, holiday decorations, or even the size of your pet. If you don’t like the rules, there’s little you can do except move out or sue the homeowner association.
- The HOA Board interprets the law: In most case, whatever the HOA Board decides becomes a binding law.
- HOA fees: Neighborhood green belts, pools, club houses and other community areas are maintained with HOA fees charged to each homeowner. These fees feel like a waste if you don’t personally utilize these community areas.
Advantages of HOAs
- They prevent extremes: If you have classic tastes, you’ll probably be happy living in an HOA-governed home. After all, you don’t want to stare across the street at a bright purple home or your neighbor’s overgrown and weed-ridden lawn. HOAs prevent these extremes and unpleasant views.
- Beautiful neighborhoods: Some rules relate to exterior home appearances, lawns, and common areas. HOAs ensure these are well-kept so you can just as confidently invite friends and family to a community park as you could inviting them to your own back yard for a barbecue.
- Tight-knit community: There tends to be more open communication between neighbors living in an HOA community. Well-maintained community areas become places parents and kids can spend time together. HOA-governed neighborhoods have a safe, open feel where everyone feels more comfortable around one another.
When you live in an HOA neighborhood, you give up some of your freedoms when it comes to decorating the exterior of your home, but in return you enjoy a beautiful, safe community. Before buying a home, find out if it’s governed by an HOA. Analyze the Covenants, Conditions, and Restrictions (CC&Rs). If there are certain ones you don’t agree with in the neighborhood your real estate agent shows to you, weigh how much you love the house against the rules.