Article Courtesy of ZING
By Zina Kumok
July 27, 2016
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 (or HOAs). These organizations exist to police the
residential areas within their scope, holding each household
responsible to a certain aesthetic and etiquette.
While HOAs aren’t inherently bad, they’re definitely a factor
that needs to be taken into account when shopping around for a
home. Here’s everything you need to know before you start the
They May Not Allow You to Rent Your Home
As someone currently buying up investment properties, rental
homeowner Elizabeth Colegrove of Reluctant Landlord said she’s
learned to stay far away from buying a house attached to a
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
People living with HOA-covered homes may be levied extra disciplinary fees on
top of their regular HOA dues. These infractions can include improperly
maintaining your lawn, painting the house a color that’s not HOA-approved, and
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 homeowner’s associations. They can increase
the monthly 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 monthly fees to determine if it’s a reasonable increase.
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 may 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 like you’d find from a landlord.
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 may happen if you 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
The Solution? Research the HOA Before You Buy
Many 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
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 just what kind of organization you’re