Most people assume that owning a home is just like owning almost anything: Once it’s yours, no one short of the government can tell you what to do with it. Seems pretty logical, right?
Unfortunately, anyone prescribing to that logic probably hasn’t had experience with homeowners associations (HOAs). These organizations exist to police the residential areas within their scope, holding each household to a certain aesthetic and etiquette.
While HOAs aren’t inherently bad, they need to be accounted for when you’re shopping for a home. Here’s everything you need to know about HOAs before you buy a home.
They May Not Allow You to Rent Your Home
As someone currently buying up investment properties, Elizabeth Colegrove of The Reluctant Landlord said she’s learned to stay far away from buying a house attached to a homeowners association.
She said HOAs often do not allow people to rent out their home or have a limit on how many people in the association can have renters. If you end up needing to rent out your home, you might be out of luck.
You May Face Additional Fines
If you have an HOA, you could be charged disciplinary fees on top of your regular HOA dues for infractions like improperly maintaining your lawn, painting the house a color that’s not HOA-approved or installing a satellite dish when the HOA doesn’t allow it.
Eric J. Nisall, founder of DollarVersity, said this applies to all types of homeowners. “Even if you own your home outright (i.e., not even a mortgage), you still cannot do as you please,” he said.
Monthly Fees May Go Up
When you buy a home, you generally know how much the mortgage will be every month. But the same isn’t true for HOA fees. HOAs can increase their fees and enforce special assessments in case of an emergency. These fees can cost several hundred or thousand dollars depending on what needs to be fixed or replaced.
You can look through the HOA financials to see how often and by how much they’ve raised fees to determine if their increases are reasonable.
They May Restrict Your Landscaping
One of the duties of an HOA is to maintain a certain standard for all the homes in their scope. Unfortunately, some take that standard too far and enforce rules that seem unreasonable.
Exterior and landscaping features are often a point of contention between residents and the association, which can dictate what kind of plants, lighting and other outdoor accessories you can have. Some may even limit environmentally friendly additions such as solar panels and composting containers.
They Decide What Kind of Pet You Can Have
Some animal lovers have found that even when they own a home, an HOA can contend that their beloved Great Dane is breaking the rules. Some HOAs even have breed and weight restrictions.
If you do break the rules and have a pet that’s outside the bounds, you may face extra fees and have to rehome your pet.
They Can Cause You to Lose Your Home
There are unfortunate stories out there about residents who have incurred hefty fees from HOAs and lost their home due to an inability to pay.
While this is a worst-case scenario, it’s something that could happen if you were to end up in a legal dispute with your HOA. If you lose in court and cannot afford the extra fees on top of your mortgage, this worst-case scenario could become your reality.
The Solution? Research the HOA Before You Buy
HOAs get a bad rap, but not all are poorly managed. Fortunately, you can find out the difference before you buy.
Real estate broker Tiffany Alexy said to check the HOA’s budget, income statement and balance sheet.
“Comparing what was budgeted for the previous year with what was actually spent will let you know pretty quickly how well managed the HOA is,” she said. “If there are any expenses that have a huge variance from what was budgeted, ask why.”
She also advised prospective homeowners to read the association board’s minutes from the past year. There you can find what changes and decisions the board wanted to make, and gain some insight into the kind of organization you’re dealing with.
What kinds of experiences have you had with a homeowners association? Let us know in the comments!
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