Homeowner Associations: The Final Word
Homeowner associations…what’s it all about and what’s up with those fees?
We’ll answer these questions, and others, to help with your decision to either join or leave a homeowner association.
Firstly, the nitty gritty. The homeowner association (HOA) is formed by a real estate developer to help market, sell and manage the homes and lots in a specified subdivision. This provides the developer voting rights in overseeing the association without the risk of legal and financial responsibility of the organization, typically incorporated as a non-profit. The developer gradually cedes power to the homeowners as the lots are sold.
What’s it all about?
Imagine developing a swath of wooded land into houses. You’re an expert developer and created a tranquil recreation area around the neighborhood retention pond complete with tennis courts, swimming pools and playgrounds. Now imagine who will maintain this area: empty the trash bins, mow the lawn, clean the pools and make repairs. Enter the HOA. As the New York State Attorney General’s office puts it, the HOA “is given the authority to enforce the covenants, conditions, and restrictions as well as manage the common elements of the development.” It’s basically a committee of homeowners vetting the community’s needs and doling out responsibilities to, usually licensed professionals. HOA’s are typically responsible for upkeep of recreational areas, roads, lighting, signage and the general aesthetics of the area. This can be considered a PRO for homeowners as it guarantees a clean, appealing environment. A clean, appealing community helps increase home values and invites further commercial and residential developments. Municipalities often encourage the formation of HOAs for this very reason.
What’s up with those fees?
Preservation of the community doesn’t come free. Those street repairs and that landscaping is costly which is why most homeowner associations charge HOA fees paid yearly or monthly depending on the association’s terms. More often than not, it’s a nominal price to pay for the return on investment with some dues as low as $50 per year while others can be as much as $1,000 per month. It’s important to determine if the charges of the HOA and its amenities reflect the needs and desires of your family.
More things to consider:
Prevalence-today, HOAs seem to govern just about every neighborhood. This may be a CON for you if you’re not in favor of HOAs.
Restrictive-homeowner associations can also dictate the color of your home, roofing materials, the scope of your landscaping, fence and mailbox styles and more. This is another potential CON. The penalties for breaking the rules start with fines and can eventually result in the HOA legally seeking the foreclosure of your home.
Mediator-no more disputes. A great PRO to HOA membership is they serve as a mediator regarding disputes and complaints between neighbors.
Loss of individuality-a PRO or CON, distinctiveness has no place in the more restrictive associations that dictate housing materials, designs and overall façade. If you’re in to showcasing your purple prejudice across the exterior of your home, you should check on the restrictions of the HOA before deciding to buy in that area.
Extras-if you’re like me, you love amenities. A wonderful PRO of HOAs is they usually provide conveniences like pools, gyms, security gates, car cleaning facilities and much more.
It’s always a good idea to discuss homeowner association details with your realtor. If you need an expert realtor to help you with renting, selling, buying and investment options, contact Lakeview Capital today.
Printable/Downloadable PRO/CON Checklist: Simply check off the items you consider to be PROs or CONs to help in your decision-making for particular properties.