Article Courtesy of FOX BUSINESS
By James Leggate
Published March 29, 2020
An increasing number of American homes are part of homeowners
associations. But are they right for you?
Homeowners associations can be found in a range of communities from condos to
suburban subdivisions. There were about 347,000 community associations in the
U.S. as of 2018, according to the Foundation for Community Association Research.
And more than a quarter of the U.S. population was living in community
There are many advantages to homeowners associations, which are commonly
referred to as HOAs, and serve a function similar to a local government, setting
rules and paying for shared items.
Many HOAs provide amenities like a pool, clubhouse or tennis courts. They also
often handle routine matters like landscaping and garbage removal and some
maintenance issues, generally exterior repairs like roofing.
HOA rules can protect you from having to look at something bizarre a neighbor
would otherwise be able to put on their property. But they can also prevent
owners from doing something that seems reasonable to them, like painting their
home a certain color or putting up a flag.
Those protections can help protect the resale value of a home. A study published
in the Journal of Urban Economics last year found that houses in HOAs have
prices that are an average 4 percent higher than similar houses not in HOAs.
There can be other downsides. The biggest one for many people may be the cost,
which can run as high as thousands of dollars each month on top of a mortgage
and property taxes in luxury skyscrapers or high-priced suburban communities
with desirable amenities like lakes or golf courses. But the average HOA monthly
fee was $331 as of 2017, according to Trulia.
HOA bylaws can prevent you from adding on to your home and set strict
requirements for your home's appearance. Breaking those rules can result in
fines, and potentially costly work to undo any non-permitted home improvements.
Refusing to pay the fines can lead to the HOA placing a lien on the home.
There have also been rare cases where residents of an HOA
were surprised to learn that they were responsible for a small dam in need of
expensive repairs or where a person in a leadership role has embezzled money
from the community.
To prevent something like that from happening, it's generally a good idea to get
involved with the HOA's board and attend meetings for anyone who does live in an
HOA community. In addition to knowing what's going on, they provide an
opportunity to meet neighbors and settle disputes.