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Pros and Cons of an HOA

Pros and Cons of an HOA | PorchLight Real Estate Group | Denver, Boulder

It’s Your Choice, HOA or No HOA

Interest rates are easing and the busy season for the real estate market is coming up quickly. If you’ve been waiting on the sidelines to buy a home, now is the right time to get out there. Along the way, you will likely tour numerous homes and neighborhoods, some with an HOA.

A Homeowners Association plays a pivotal role in maintaining the quality and even harmony of the residential communities they govern. Their dynamics can significantly impact your experience as a homeowner, so it’s vital to consider all aspects before deciding to make an offer on a home within one of these communities.

Sure, HOAs tend to be a contentious, over-sensationalized topic. You’ve likely heard stories about associations with strict rules and outrageous fines. You may feel that if you’re investing a huge amount of money into a home, you should be able to do whatever you want, even paint it pink with purple polka dots, and let the grass grow to 12 feet high. 

If you want that kind of autonomy, an HOA might not be right for you. And that’s completely fine, just let your real estate agent know up front! Then again, if you’re on the fence about an HOA community or plan to purchase a condo where an association is likely unavoidable, there are upsides and ways to research their inner workings and find a great fit.

In addition, significant decisions are typically voted on by homeowners, so if you end up living in an HOA community, your best bet is to get involved. You could even volunteer to join the board if and when there’s a vacancy. Change comes from within, right? Let’s take a closer look.

What Is a Homeowners Association?

Governing a neighborhood or condominium complex, an HOA is typically in charge of managing, maintaining, and enhancing shared spaces and common amenities such as a pool or fitness center. They set and enforce community covenants and rule restrictions (CC&Rs), collect fees (known as dues or assessments), and oversee the general well-being of the community. Common types of HOAs include:

HOA Community—Single-family homes and sometimes townhomes might have an HOA that will oversee the upkeep of shared facilities, amenities, and common areas. It may even provide snow shoveling and plowing. HOA rules, known as covenants, can also govern the community’s overall aesthetic, including home paint colors, landscaping changes, and other exterior attributes. 

Condo Association—In condominium complexes, the association maintains a building's exterior, common areas, amenities, and sometimes utilities. Buyers who want to condense costs for utilities and landscaping into one predictable payment might find condo living to be a great fit. The HOA may also provide insurance for exterior structures such as the roof which can be a big relief during hail season.

Master Association—This is an overarching HOA that governs multiple smaller sub-associations or sub-HOAs within a larger development or planned community. They might be responsible for common elements like roads, sidewalks, or large-scale landscaping. It may also oversee facilities and amenities used by all residents such as rec centers and pools, a golf course, or parks. 

What Are the Pros and Cons of an HOA?

So, now that you know what they are and what they do, here’s the nitty gritty.

Pros of an HOA

  1. Improve Your Quality of Life—An HOA that manages all amenities, facilities and grounds can greatly reduce the hassle of exterior upkeep—some will even mow the lawn right up to your front step and shovel snow off your sidewalk. You may enjoy access to a sparkling pool, fitness center (no gym membership needed), playgrounds for your kids, a BBQ area, and a clubhouse for hosting big parties and gatherings.
  2. Preserve Your Property Value—With rules and regulations, plus the ability to enforce the community standards, many HOA communities look neat, tidy and welcoming. Through regular upkeep and updates of communal areas, a proactive association can help maintain and even boost your property value above the average for the area.
  3. Streamline Your Monthly Bills—While they might be rolled into your fees, an HOA might cover utilities like water, sewer, trash, cable and more. Insurance for exterior structures such as your roof or fence may also be included in monthly dues and repaired for you in case of damage from a famous Colorado hail storm. Sure, you ultimately pay for these items, but you don’t have to worry about making sure multiple things get handled each month. 
  4. Get Help with Disputes—If your neighbor blasts music all night or allows their dog to bark all day, that’s likely a violation of the HOA rules. And instead of dealing with such a conflict face-to-face, you can notify the association and allow them to enforce the rules for you.

Cons of an HOA

  1. You’ll Pay More Than a Mortgage—You don’t get a pool and roof insurance for free, just consolidated into a monthly fee. That means you’ll need to consider HOA dues when it comes to your budget to buy a home or condo unit. Leave wiggle room for increases and keep in mind that yes, an HOA has the power to foreclose on your home if you don’t pay.
  2. More Uniformity, Less Individuality—As stated above, if you want a hot pink house and to keep your holiday lights up year-round, an HOA community might not be right for you. You may also be required to keep your lawn mowed and your RV parked at a storage facility. Ultimately, it’s all part of preserving the aesthetic and home values, so carefully read the rules and make sure you're on board with them.
  3. There Are Consequences—Forget to pay your HOA fee? There might be a fine. Build too tall of a fence? You'll likely get a notice to fix it and a fine if you don't. These charges will also typically increase incrementally the longer you don’t comply or pay. Eventually, the HOA can even foreclose on your home. Even if you think you’re in the right, fighting them in court can be tough.

How to Identify a Healthy, Happy HOA

When considering a property governed by an HOA, there are several key factors that you should assess. And your real estate agent will provide you with documents to review as well.

  • Financial Stability—Review the HOA's financial statements and make sure deep reserves are available for proper maintenance, unexpected expenses, and major repairs. The HOA should be able to cover costs without imposing a special assessment or raising monthly dues.
  • Fair and Clear CC&Rs—As a buyer, you’ll typically receive a copy of the CC&Rs once you’re under contract (along with financials and other documents). Your agent may also be able to track them down for you to review before making an offer. Read them carefully before deciding to move forward!
  • Evidence of Effectiveness—Look for well-maintained landscaping, homes and amenities. Do a Google search to see if there are positive reviews—or legitimate negative ones. And if possible, chat with current residents to see if they are happy with how the HOA operates.

If you need help assessing an HOA, your agent should be able to help you find records and any other information you want. They can ask colleagues about the association’s reputation and see if their clients have moved into the building or neighborhood.

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