5 Things Your Should Know About HOAs

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If you're in the market to buy a home, you'll probably run across a Homeowners Association (HOA) at some point in your search. It is estimated that nearly 60% of new single-family communities in the United States are governed by an HOA. Essentially, an HOA manages and maintains a community's property and shared amenities such as green spaces, swimming pools, tennis courts, clubhouses, tot lots and more. It also enforces rules to abide by on your own property, such as landscape upkeep, exterior painting and pressure washing. It's not uncommon for single-family and townhouse communities, condos, and co-ops to be governed by an HOA, with its own set of covenants and bylaws. Ensuring your community looks attractive and well-kept is important because it not only helps keep the community safe and beautiful, but it may increase the value of your home.

We've compiled a list of 5 essential things you should know when considering a community with an HOA:

  1. An HOA is comprised of community residents. Usually called the Board of Directors, these residents are elected by the community's residents and meet regularly to ensure important services are maintained. These services may include landscaping and upkeep of common areas, handling insurance and community utilities and other finances, and issuing warnings or penalties when a homeowner breaks a covenant rule.
  2. The HOA's covenant outlines and enforces the community's bylaws. If the rules are broken, a warning or penalty may be issued to the homeowner. These violations could include anything from failure to cut the grass often enough to painting your home's exterior an unapproved color to parking your trailer or commercial vehicle in your driveway. Each HOA has its own unique set of rules and regulations.
  3. An HOA can limit the size of your pet or ban your pet from the community altogether. Most of us consider our pets family, and such a restrictive rule may deter potential buyers from choosing a particular community. Luckily, before you buy into a community with an HOA, you can review its covenants and bylaws.
  4. HOAs charge monthly maintenance fees and/or dues. These fees can range anywhere from $100 to $1,000 depending on where you live and what amenities are offered. The fees usually cover all the maintenance of the common green areas of the property and shared amenities such as tennis courts, pool, playground, etc. They can also charge additional dues if your community has a golf course, or they may allocate funds to plan community and holiday events. HOA fees can also fluctuate from year to year.
  5. The HOA maintains and approves the community's budget. Typically, an HOA maintains two accounts, an operating account and a reserve account. The operating account pays for routine maintenance and the upkeep of all community amenities and improvements. The reserve account is used for any emergencies that may crop up, such as pool repairs, or if the clubhouse needs a new roof. Residents typically vote on these expenditures before they are approved.

Is an HOA Right for You?

An HOA may not be the right choice for everyone. Still, they do serve an essential purpose—to ensure the continued enjoyment and beauty of your community. Bottom line: When considering a home in a particular neighborhood with an HOA, it is important to understand its rules and restrictions before signing a contract. The team at NP, Inc. understands that many factors go into your decision to buy a home, especially where you obtain financing, so we are always available to offer advice or help you secure the perfect loan. With over 25 years of experience, we're a respected community lender you can trust. You can fill out an application online by visiting usmtg.com.