Guides to Retiring
The Pros And Cons Of Living In An HOA
We all know that HOAs don’t have the best reputation in town… in fact, some people avoid them in their home search entirely. While HOAs certainly have their own set of pros and cons, we are here to help you weed through the information and explain some of the benefits, as well as the downfalls of living within an HOA.
What is an HOA?
An HOA is a corporation that is established to oversee the physical, financial, and legal aspects within a deed restricted community. HOAs help the community run smoothly on a daily basis. They maintain a community’s overall appeal, aesthetic and property values on behalf of the homeowners.
Who makes the rules in an HOA?
Many communities are regulated by a set of legal governing documents referred to as Declarations, Bylaws, and/or Covenants, Conditions and Restrictions (often referred to as CC&Rs). Typically, those governing documents will establish guidelines for a Board of Directors who are elected by the homeowners to represent the association. Some communities will also hire a management company to support the Board of Directors and help manage operations within the community.
When considering what community might fit best for a certain lifestyle, it is incredibly important for a buyer to consider how the rules and guidelines set forth within the association’s governing documents might affect them. All owners are expected and required to follow the rules and guidelines set by the HOA. Some examples are monthly, quarterly, and or annual HOA fee amounts. Other rules could include, but are not limited to:
- Architectural restrictions
- Dates of meetings
- Responsibilities of the association vs responsibilities of owners
- Number of pets allowed within a household
- Types of signs allowed in front of the home
- Types of vehicles permitted to park in the driveway or on the street
Management Company vs Self-Managed HOAs
There are two options when it comes to the management of HOAs. Some associations choose to manage the HOA themselves, while others choose to employ a management company for the community. While you don’t have to pay the monthly cost of a management company living in a self-managed HOA, you also lack the oversight that you have from a property management professional and their team. The experience, knowledge, and connections that a reputable HOA management company can provide, can be extremely valuable when it comes to ensuring that an HOA is not being mismanaged.
What are the benefits?
One of the key aspects of an HOA is to help maintain and update the community in such a way that your property values will continue to rise, so there can be quite a few benefits to living within one. These benefits can include maintenance of roads and sidewalks within the community, amenity maintenance and upkeep, lawn care, and even cable and internet service.
Some HOAs make the decision to hire a management company to handle much of the day-to-day work, support the Board of Directors when needed, oversee financial aspects of the community, collect assessments, facilitate contracts for cable, provide internet, provide lawn services, and handle any issues that may arise within the community. With a good management company and a united Board of Directors, homeowners can feel confident that the community they live in is being well taken care of.
Aside from those aspects, it can also create a sense of community. It allows owners to get involved as board members and interact with their fellow neighbors to keep a positive community culture.
What are the cons of living in an HOA?
If you’d prefer not to have a set of rules enforced that you might not fully agree with, HOAs might not be the best fit for your lifestyle. As we mentioned, owners living within HOAs are held to the rules and regulations set forth in the association’s governing documents – these rules can dictate the color of your home, length of your grass, types of plants you can and can’t plant, whether or not you can have a fence, if and when you can put up decorations, and many of these often require approval from an ACC (Architectural Control Committee), ARC (Architectural Review Committee) or Board of Directors in order to move forward with modifications. The motivation for these rules and regulations is to keep a uniform aesthetic throughout the community, but some homeowners understandably choose not to live in HOAs so they can enjoy the flexibility of being able to add their own touch and design to their homes whenever and however they would like.
For retirees who maintain a strict budget, HOA fees might seem like an expense that puts your dream home out of reach. HOA fees are subject to change as the association requires and there is a chance that they can go up each year. It is important to choose an association that is financially healthy – so make sure to ask your agent about this. HOA fees can rise or fall for many reasons including costs for maintenance, cable, internet, lawn care, preventative maintenance for the community or amenities, etc. It’s also important to keep in mind that special assessments might be imposed unexpectedly. Typically, Boards try to provide sufficient notice to owners so they can financially prepare to take on this additional and sometimes large expense, but that does not mean it will be convenient for all homeowners.
What does an HOA board do?
An HOA board is put in place to represent the ownership interests of the community. Board members are typically voted on by the ownership based on term lengths set forth within the governing documents. Term lengths typically range from 1 to 5 years and stagger so that the board doesn’t always remain the same.
One of the best parts of being part of the board is helping to create the kind of community you want to live in. It allows board members to discuss and determine short-term and long-term goals for the community and come up with a plan for the future of your community.
It’s always good to remember not to be too hard on your Board members – they are volunteers that dedicate their personal time on behalf of their community and there are times when they have to make difficult decisions for the long term good of the community – even when others disagree.
What questions should you ask about an HOA?
If you’re interested in a certain community and want to learn more about the HOA – call them! Reach out and ask whatever questions you need to ask to make sure that you are finding the right community to fit your needs. Our Explore55Plus agents can help you determine what some of those important questions may be and can even help get those answered for you. Here are some commonly asked questions:
- What does the lifestyle look like?
- How often are monthly/quarterly/annual HOA fees increased?
- What does the HOA fees cover?
- Any plans for an upcoming special assessment?
- Are pets allowed? How many?
- Is fencing allowed?
- How often does the board meet?
- May I review a copy of the governing documents prior to purchasing?
- What community improvements are planned in the next few years?
The bottom line on HOAs: No association is perfect. HOAs are a great way to help control the value of your community, allow owners to have more independence and less responsibility, and create a stronger sense of community. Not without its downsides of course, but we cannot emphasize enough – do as much research with your agent as you can to make sure you’ll be as happy as possible in your new home!