Homeowners Associations: How They Impact You Long-Term

Real estate agents will most likely be very familiar with this request from their clients: find me a house without a homeowners association. Some first-time property investors don’t see an HOA as a deal-breaker. Others don’t want all the rules (not to mention the HOA fees) that come along with the real estate they are buying.

Regardless of whether the buyer thinks that an HOA is a deal-breaker or not, it’s best to arm yourself with all the information on the long-term impact of being a member of a homeowners association before deciding to take the plunge.

Homeowners Association Defined

A homeowners association is basically a group organized and founded by the real estate developer to manage, market and sell condominiums, houses, duplexes, and the like. It will also craft the rules and restrictions that homeowners should abide by as long as they are members of the organization. One good example of the association’s function is the collection of garbage in the neighborhood, which is paid for by the members.

HOA fees are collected every month, bi-monthly or annually, depending on the conditions of the association.

Benefits of Being a HOA Member 

There are some distinct advantages to being a HOA member. For instance, you maintain the high market value of the properties in the neighborhood. Real estate agents will tell you that your house is only as good as the neighborhood where it’s situated. Houses in the area which are lacking in curb appeal or that are badly maintained will weigh down the property value of your home.

HOA rules will ensure that all lawns are manicured, shrubs are shaved, vehicles are parked properly and the community is free from garbage and other eyesores. Housing communities with HOAs often have amenities like a pool, gym or children’s playground which you will have access to.

The association will also ensure that any neighborhood tensions do not escalate into violence by using meetings and mediation to discuss any problems that neighbors may have.

Downsides of Being a HOA Member

Although there are pros, there are also some cons to being a member of a HOA. For one, you will have to pay the association fees. Understand that in high-end residential areas the fees could be as high as $1,000 a month. The worst thing is that the fees are not tax deductible.

Another drawback is that any renovation or remodeling you plan on carrying out on your home will have to be pre-approved by the HOA. Some homeowners associations will insist on a particular design of the house, which can extend to the landscaping, to maintain the aesthetics of the neighborhood.

Violators will face a fine and this is within the purview of the HOA. It’s right there on the fine print on your contract. The association may also raise its fees and fines at any time.

Lastly, the HOA has the authority to evict you from your home if you don’t comply with the rules. That kind of threat hanging overhead obviously puts quite a few house hunters off from getting involved in this kind of arrangement.

Those are just some of the pros and cons of being a member of a HOA. Your realtor should be able to explain these in detail. Ultimately, however, the decision is up to you.