Common now more than ever are homeowner associations. Just in Idaho there are more than 3,000 homeowners’ associations. If you’ve ever found yourself touring adjoining neighborhoods, but one maybe looks more spruced up and well cared for versus the other? Chances are there might be a homeowner association involved.
Ever wonder why in some communities most of the houses are similar colors? Most likely a homeowner association. When looking at home for sale- an HOA can make or break the deal. It’s important to know how these associations work and understand what you’re signing up for when you buy that new home.
What is a Homeowners Association
A homeowners association is just that. When a developer begins building a new community, they usually have a vision about the long-term and how they want the new subdivision look and feel many years down the road. Once enough new residents populate the new development, the developer hands the reigns to a select group of homeowners.
This “association” or group of individuals is usually elected by other residents and form a type of committee. These are the folks responsible keep the neighborhood looking good as well as making sure the association is running like a well-oiled machine. As a homeowner, one of the requirements is that as a resident, you must be a part of the HOA. This doesn’t mean you have to volunteer time at meetings but simply means that no matter what- you are responsible to pay dues and adhere to the guidelines.
The HOA is governed by the CC&R’s (Covenants, Conditions and Restrictions). Which is the formal outline of acceptable or non-acceptable items the community is expected to adhere to. These documents are key here. They lay out specifically what a resident can and cannot do. For instance, some HOA’s have specific paint colors acceptable for the exterior of your home.
In some communities, it’s not acceptable that cars are parked in the street for an extended period of time. Each is unique and different which is why I always advise clients to review and beware of these during the due diligence period when buying a new home.
HOA Dues and what they are used for
Depending on the community- dues can be charged monthly, quarterly and annually. HOA fees are typically $250 – $500 annually in the Boise area. Keep in mind the amounts will vary greatly depending on your location and the types of amenities your community offers.
If you’re moving into a luxury community with multiple community pools, walking paths, fountains and parks- it’s a safe bet that you will be forking over major dough over the course of the year. Also, most condominiums have HOA’s and dues, some of which will cover all exterior maintenance of the building as well as utilities. This is why it’s crucial to know how much your HOA is going to cost and what it covers so you can make a good call as to whether or not the community is a good fit for you.
Important considerations about HOA dues – How are HOA fee increases set? How often do increases occur? How large is the HOA’s reserve fund? Have any special assessments been made? Are there any special assessments planned?
One thing to keep in mind is that dues are paid separately from the mortgage and property taxes so it’s an extra expense to account for when owning a home in a community that has an HOA. In some states, failure to pay your HOA dues can result in the association placing a lien on your home.
Pros and Cons of an HOA
Have you ever driven through a neighborhood and while most of the homes look well-kept, you pass by the one whose owner collects broke down cars and has the wild, untamed lawn? Perhaps the one whose owner really likes bright neon colors which is evident by the color choice of their home? This is where an HOA comes into play. Having a set of established rules, keeps the homes looking tidy in the neighborhood, but prevents unsightly things such as the ones mentioned above. All of which results in cleanly kept communities which in turn means potentially higher property values.
If your community has great amenities like community pools, walking paths or maybe a clubhouse- the dues you pay help finance the care and upkeep to keep the facilities in working order for all to enjoy. The duty of the association is to enforce the CC&R’s- this could include such things as choice of house color, the condition of your front lawn and could even dictate whether or not you may park an RV or boat in your driveway. All in an effort to keep the neighborhood looking neat and tidy.
Some of the cons to living in a neighborhood with an HOA include having a set guideline as to what you can and can’t do to your home. While many see this as a benefit, others may see this as an overreach of power, simply put- people don’t like being told what to do. In the event street parking is prohibited- this may be an issue for a homeowner who has more than a couple of vehicles as this could result in a fine from the HOA.
In Idaho, HOA’s have to give written notice to a resident out of compliance with a neighborhood code. The homeowner has 30 days to fix the problem before being fined. Homeowners have the right appeal the fine if they’re trying to remedy the problem.
If you have a recreational vehicle or a boat, it can be a challenge in some communities in finding a space for it which could result in additional cost of having to pay for storage. In the event you’re not the one to keep up the front lawn, this could pose an issue for not meeting HOA criteria resulting in warnings and potential fines. The important part is knowing what is acceptable to you as a homeowner prior to committing to purchasing a home with an HOA.
While there are many horror stories about homeowners’ associations who overstep their authority and rule with an iron fist- most are beneficial to a homeowner. Today, nationwide- one in five homeowners lives in a community governed by an HOA, so it’s safe to say they are not going anywhere anytime soon. At this point, associations in new communities are now the new norm.
Not all HOA’s are the same either. Some are more laid back while others are more stringent. So for you as a homebuyer, it is a best practice to be diligent in learning about how a potential home with an HOA works and whether or not it’s something you’ll be able to live with.
Unfortunately, there are many times when a buyer and their agent don’t complete this crucial step resulting in a very unpleasant experience for the new homeowner. As always, be sure you know before you buy!