Drive through any Seattle or Tacoma area subdivision, and you’re likely to notice the picture-perfect front yards. Exterior colors seem to coordinate. Nothing is too garish, and nothing seems out of place. Welcome to an HOA neighborhood. One in four Americans, today live under an HOA in single-family homes, condominiums, or townhouses. Before you purchase a home under HOA governance, you need to understand the implications fully.
What exactly is an HOA?
The HOA helps to ensure that neighborhood maintenance runs smoothly and things look the way they should. They act as the elected governing body of a community. They help create and enforce the rules and regulations (known as Covenants, Conditions, Restrictions, and Easements (“CC & Rs”). The CC & Rs have helped create that picture-perfect neighborhood and well-maintained amenities.
But, everything has a price. To cover the costs of maintaining the neighborhood, all homeowners pay an HOA fee (or dues). These are paid monthly, quarterly, or yearly, and how much you pay is determined by several factors:
- What does the HOA cover?
- How many residences are in the neighborhood or building?
The Good & the Bad of HOAs:
There are pros and cons of living with a Homeowner’s Association (HOA). Let’s start with the advantages:
- HOA rules can help protect home values because uniformity and conformity are primary concerns for HOA regulations – as is safety. In other words, if your neighborhood wants to paint their house orange and park a boat on their front lawn, it’s not going to happen if the CC & Rs say it’s not allowed.
- HOA neighborhoods tend to be well-maintained with more amenities and facilities than neighborhoods without HOAs. Neighborhood pools, recreation centers, parks, and spas are usually maintained or overseen by the HOA.
- Ensuring safe and operable facilities, sidewalks, and streets are typically monitored and supported by the HOA.
- HOAs can help ensure municipal code compliance in addition to neighborhood rules.
- An elected governing board oversees the financial stability of the neighborhood which can bolster property values. A well managed HOA can ensure there are sufficient funds for future repairs, roads, or other capital improvements.
If HOA neighborhoods sound idyllic, it’s because, for the most part, it’s usually the case. However, good things sometimes have a downside, and HOA governance is no different.
- >Rules, rules, rules. CC & Rs can regulate everything from how you must maintain your yard to what color you can paint the exterior of your house. If you want to take down a tree, many CC & Rs regulate that as well – not to mention all home construction and additions. You might want to extend your house only to find that neighborhood setbacks or easements won’t allow it.
- While you can request or petition for a rule change or an exception, you might not be happy with the outcome. Yes, you can file a lawsuit. However, CC & Rs are typically legally binding, and many if not most homeowners will find legal battles with their HOAs a lost cause.
- Fees or dues are what keep things running under an HOA, and everyone has to pay their share. If you fall behind on your dues (or fail to comply with covenants), the HOA has a legal right to put a lien on your home.
- Special assessments are sometimes necessary for significant repairs or improvements. An older neighborhood which maintains its private roads might find it’s time to resurface them to the tune of several hundred thousand dollars. The price tag is split among the residents with a special assessment due – in addition to your regular HOA dues.
Before you purchase a home in an HOA neighborhood, it’s critical to perform your due diligence and review all of the CC & Rs. You should understand what you can expect in return for your HOA dues. A little research can uncover previous lawsuits or complaints against the HOA or issues with the governing board of the association. Ask about the history of the dues’ increases and any past special assessments.
Lastly, ask about their special reserves (a rainy-day fund for unexpected repairs or other issues) and are there any upcoming special assessments. The more you know about a neighborhood’s HOA and its history before you purchase a home, the better.
-Diane Evia-Lanevi (Nor’West Property Shop Senior Staff Writer)