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Becoming a homeowner includes a few expenses. Before you sign your final paperwork, you must come up with a down payment, closing costs, inspection fees, and other miscellaneous fees. Once you sign on the dotted line, there is your mortgage, insurance, and, for some owners, an HOA fee. Have you ever wondered what exactly a Homeowners Association does and whether they are worth it or not?
Homeowners Association: Pros and Cons
What is a Homeowners Association?
Basically, an HOA is a third-party organization (outside of the builder and homeowner) that creates the rules for a subdivision, planned community, or condominium complex and enforces these rules. These rules may range from whether or not you can park on the street to what color you may paint your home. Roughly 55,000 communities in California alone are overseen by HOAs. If you purchase a new build, chances run high that it includes an HOA. Like most things, HOAs offer a good side and a not-so-good side.
HOA Pros
On the plus side, an HOA usually offers amenities such as a community clubhouse, pool, gym, and/or park. Your HOA fees cover the maintenance of these amenities as well as the maintenance of public areas in and around the community. Also, they enforce guidelines that ensure homeowners keep the exterior of their properties looking good. This helps with property values. If you’ve ever lived near a home where the owner doesn’t keep up a well-manicured appearance (ie, “lets the property go”), then you understand what I’m talking about.
HOA Cons
Unfortunately, HOAs also come with a few negatives. First, any change you want to make to the exterior of your home (whether changing the fencing, painting, adding a shed, or putting in a concrete pad for your RV) must be approved by the HOA board first. Want to utilize your property as a rental? Again, you must take it up with the HOA board first. Next, they may hit you up for an additional fee if their expenditures outweigh their reserves. For example, if the roads in your subdivision are looking a bit worse for wear, they may request an additional sum of money to help pay for resurfacing. And if you fall behind on your dues, believe it or not, the HOA may legally force you into foreclosure. However, that is a rare occurrence and is only used as a last resort.
Rules and regulations vary from HOA to HOA. Talk to your REALTOR® about whether or not the community you wish to buy into includes an HOA. If so, find out what those rules and regulations consist of. Make sure you are willing to abide by them before you sign on the dotted line.
Muna Dionne, your Inland Empire specialist with Coldwell Banker Realty
