The costs and benefits of a Homeowners Association

Gated communities are often controlled by Homeowners Associations. Image: Flickr / tz1_1zt / CC-BY-SA

Homeowners Associations, usually referred to as HOAs, are a hotly debated entity among home buyers. If you are planning on moving, no matter whether you are renting or buying, an HOA is important to consider.

The basics of an HOA

A Homeowners Association, Condo Association or Property Owners Association is generally started by the property developer and turned over to the owners once a plurality of the property has been sold. The HOA is a legal association of individuals, and it is generally also a legal entity with some kind of right to control the property. These associations will generally create and enforce CC&R documents, which are Covenants, Conditions and Restrictions. CC&R documents can set just about any kind of requirement, and they often cover things such as parking, maintenance and landscaping.

The financial costs of an HOA

An HOA or condo association generally has the right to levy fees and fines of some kind on the property owners that live within the association. These fees will often cover maintenance of communal property, such as roads, swimming pools and garbage collection, or any other group expenses. These expenses are sometimes voted on by the members; other times these expenses are built into the HOA by the developer of the property.

The benefits of an HOA

Many HOA advocates say that an HOA can be incredibly helpful for home values. Most HOAs control things such as maintenance and landscaping and neighborhood behavior, which can help keep property values much more stable. An HOA can also create a community that fits much more closely the type of community members want to live in. Homeowners Associations tend to vary as widely as the homes in them; some associations are very lax, other associations will levy a $1,000-plus fine for minor infractions.
[If you would have to get payday loans to pay HOA fines, you may want to consider a different neighborhood.]

A note on foreclosures in HOAs

Most HOAs have a built-in ability to foreclose on the homes in the association for unpaid dues or fees. Associations are able to do this because the homeowner signs a contract upon purchasing the house that promises to live within the CC&R of the association and to pay the dues. HOA foreclosures often take less paperwork and can happen much more quickly than bank foreclosures.

Sources

Sun-Sentinel
Phoenix Real Estate Guy
PlannersWeb

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