Quick, name some of the many things you consider when you’re looking for a new home.
There’s the size and layout of the house, the neighbors, the school district, the ease of access to major arteries, the amenities in the neighborhood. But there is another big one that often flies under the radar.
Does your potential new neighborhood have a homeowners association?
If so, there are a handful of things you should keep in mind, both good and bad. Such a group helps manage disputes and maintains the beauty of common spaces. But those amenities come at a price that’s both fiscal and potentially emotional.
So homeowners associations — often called HOAs, neighborhood associations, or, sometimes in our beloved South, “garden clubs” — are a mixed bag. Here’s a closer look at the benefits and potential headaches to help evaluate if one is a good fit for you.
The Pros
Does the neighborhood have a lovely, elaborate entrance sign, perhaps set in stone with a flower garden around it? Well, those flowers aren’t planting themselves. And if a wayward car strikes that monument, the city or county you live in isn’t going to replace it.
Is there a community park or pool that needs regular maintenance?
Those are all the sorts of things association dues will pay for.
Is there a dispute over a fence line? Or what about that neighbor’s tree limb, precariously dangling over your driveway? Or should that junker car in the adjacent backyard be hidden behind a privacy fence? The association typically has a board and regular neighborhood meetings to hash out differences of opinion.
An HOA also typically means a higher home value. That’s the reason they were created in the first place.
“The rules and regulations established by an HOA are designed to protect the value of each property,” says Henderson Properties, a Charlotte, N.C. group which manages community associations. “The primary purpose of the homeowners association is to ensure that an individual or group cannot negatively impact the market value of homes in the neighborhood.”
The Cons
But as the old saying goes, “taxes ain’t free.” An association provides added services, and those services come at a cost. Dues are often collected either monthly or annually. And they can range dramatically, based on the scope of the group’s services.
“These dues can run from under $100 a year to over $1,000 a month, depending on the community,” reports Credit.com.
And when you buy into a neighborhood with an HOA, you are also agreeing to a full slate of bylaws that the community has agreed on. These can regulate what kind of fence you put up, whether or not you can make additions to the house, how often you must maintain your lawn, where you can park that RV you’ve been eyeing, or even what color you can paint the house.
Often, aesthetic changes must go before a review board for approval, to make sure they’re A-OK by the HOA. This sort of micromanagement isn’t for everyone. And the track record for fighting a decision you don’t like in a higher court is not good.
The Week newsmagazine reported about a Rancho Santa Fe man who planted what his HOA deemed as “too many rose bushes” on his 4-acre property. He fought them in court.
“After a judge ruled that the willful rose enthusiast had violated the community’s architecture design rules, he was forced to pay the HOA’s $70,000 legal bill — and lost his home to the bank,” the article states. You might say he was guilty by association. (For more horror stories, read the full article.)
Scoping it out
The bottom line is, be sure to know whether or not your potential new neighborhood has an HOA or not. And if it does, read through its bylaws to make sure it’s a good fit for your lifestyle, your future plans for the house, and your pocketbook.
How do you get ahold of the bylaws?
The seller often has the documents and can share them with you. If you’re represented by a good real estate agency, they can get them, too. In fact, as part of our due diligence on any property we deal with, Carter and Associates tracks down the HOA agreement for access by the potential buyer. It’s one of the 185 benefits we provide for every homeowner we represent.
If you, as a potential buyer, are struggling to access the bylaws, by all means, make the sales contract contingent on seeing and approving them first. The last thing you need as a $1,000 monthly surprise after investing so much of your money on closing on your dream home.
We are here to help. Contact us for a no-obligation discussion about your real estate needs.