Article Courtesy of  ZING

By Zina Kumok

Published July 27, 2016

Most people assume that owning a home is just like owning almost anything: once it’s yours, no one short of the government can tell you what to do with it. Seems pretty logical, right?
   

Unfortunately, anyone prescribing to that logic probably hasn’t had experience with homeowners’ associations (or HOAs). These organizations exist to police the residential areas within their scope, holding each household responsible to a certain aesthetic and etiquette. While HOAs aren’t inherently bad, they’re definitely a factor that needs to be taken into account when shopping around for a home. Here’s everything you need to know before you start the process. They May Not Allow You to Rent Your Home As someone currently buying up investment properties, rental homeowner Elizabeth Colegrove of Reluctant Landlord said she’s learned to stay far away from buying a house attached to a homeowner’s association.

She said HOAs often do not allow people to rent out their home or have a limit on how many people in the association can have renters. If you end up needing to rent out your home, you might be out of luck.

You May Face Additional Fines

People living with HOA-covered homes may be levied extra disciplinary fees on top of their regular HOA dues. These infractions can include improperly maintaining your lawn, painting the house a color that’s not HOA-approved, and installing a satellite dish when the HOA doesn’t allow it.

Eric J. Nisall, founder of DollarVersity, said this applies to all types of homeowners. “Even if you own your home outright (i.e. not even a mortgage), you still cannot do as you please,” he said.

Monthly Fees May Go Up

When you buy a home, you generally know how much the mortgage will be every month. But the same isn’t true for homeowner’s associations. They can increase the monthly fees and enforce special assessments in case of an emergency. These fees can cost several hundred or thousand dollars depending on what needs to be fixed or replaced.

You can look through the HOA financials to see how often and by how much they’ve raised monthly fees to determine if it’s a reasonable increase.

They May Restrict Your Landscaping

One of the duties of an HOA is to maintain a certain standard for all the homes in their scope. Unfortunately, some may take that standard too far and enforce rules that seem unreasonable.

Exterior and landscaping features are often a point of contention between residents and the association, which can dictate what kind of plants, lighting and other outdoor accessories you can have. Some may even limit environmentally friendly additions such as solar panels and composting containers.

They Decide What Kind of Pet You Can Have

Some animal lovers have found that even when they own a home, an HOA can contend that their beloved Great Dane is breaking the rules. Some HOAs even have breed and weight restrictions like you’d find from a landlord.

If you do break the rules and have a pet that’s outside the bounds, you may face extra fees and have to rehome your pet.

They Can Cause You to Lose Your Home

There are unfortunate stories out there about residents who have incurred hefty fees from HOAs and lost their home due to an inability to pay.

While this is a worst-case scenario, it’s something that may happen if you end up in a legal dispute with your HOA. If you lose in court and cannot afford the extra fees on top of your mortgage, this worst-case scenario could become your reality.

The Solution? Research the HOA Before You Buy

Many HOAs get a bad rap, but not all are poorly managed. Fortunately, you can find out the difference before you buy.

Real estate broker Tiffany Alexy said to check the HOA’s budget, income statement and balance sheet.

“Comparing what was budgeted for the previous year with what was actually spent will let you know pretty quickly how well managed the HOA is,” she said. “If there are any expenses that have a huge variance from what was budgeted, ask why.

She also advised prospective homeowners to read the association board’s minutes from the past year. There you can find what changes and decisions the board wanted to make, and gain some insight into just what kind of organization you’re dealing with.