Some neighborhoods have this little thing called a homeowners association. Some people believe HOAs are a helpful organization to keep everything in the neighborhood uniform and looking its best. Others see them as an annoying $200-ish bill you have to pay to have someone tell you what you can’t do to your own property. Today we’re exploring what an HOA actually is, where your money usually goes, and what could happen if you were to stop paying the bill.
If you make an offer on a home that has an HOA in place, you’ll eventully get these papers called “covenants, conditions, and restrictions” or CC&Rs. When you sign on your house, you’re also signing off on these CC&Rs – promising to abide by them. It’s the HOA’s job to monitor homes and make sure everyone’s following the rules. Those CC&Rs can cover everything from the color of your house, to the type of fencing you can put up, and even the breed of your dog. They can require you to have a tree in your front yard or a certain type of curtains on street-facing windows. The goal of an HOA isn’t to be annoying or micromanage people, but just to make sure the neighborhood keeps its “look” – if you will.
HOAs also maintain common areas. For instance, if there’s a community swimming pool and the heater breaks…someone has to pay for that, and that’s where the HOA comes into play. Sometimes they hire out to maintain parks or plow the neighborhood’s streets, they may cover city service’s like water, sewer and garbage, or manage the neighborhood’s security system and gate.
Typically HOAs are about $100-200 a month, but they can be as low as $200 a year. The price typically depends on the services the HOA offers. Members of an HOA are usually charged a bit more than the monthly expenses, so that a reserve can be built up, in case of an emergency or big-ticket items.
If you get fed up with the HOA and start breaking rules or stop paying dues, you could get hit with a big fine, sued, a lien may be put on the home or it may even be foreclosed on.
HOAs aren’t for everyone. So before you make an offer on a home that has an HOA in place, look over those CC&Rs and make sure you are okay with everything your HOA will do and monitor.