Things to keep in mind before buying a home in an HOA

Homeowners associations (HOAs) are a common feature in many neighborhoods, especially in planned communities, condominiums, and townhomes. While HOAs can offer benefits like maintaining neighborhood aesthetics and shared amenities, they also come with rules, fees, and potential challenges that every homeowner should carefully consider. Here's what you need to keep in mind before buying a property governed by an HOA.

1. Understand the Fees

HOA fees can range from a few hundred dollars annually to several hundred dollars per month, depending on the community and amenities. These fees typically cover:

Landscaping and common area maintenance
Utilities for shared spaces
Amenities like pools, gyms, and clubhouses
Reserve funds for future repairs or unexpected costs

Tip: Request a breakdown of HOA fees and understand how they’re allocated. Be aware of any plans for fee increases, as these can significantly impact your budget.

2. Know the Rules and Restrictions

Every HOA enforces a set of rules, often outlined in documents called Covenants, Conditions, and Restrictions (CC&Rs). These rules are meant to maintain the neighborhood's appearance and function but can sometimes feel restrictive. Common rules include:

Limitations on exterior modifications (painting, landscaping, fencing)
Restrictions on parking (number and type of vehicles, street parking)
Rules about pets (number, size, or breed restrictions)
Guidelines for renting out your property (short-term or long-term rentals)

Tip: Read the CC&Rs thoroughly before committing to a property. If any rule feels like a deal-breaker, consider whether the HOA is the right fit for you.

3. Assess the HOA’s Financial Health

A financially healthy HOA is essential for avoiding unexpected assessments or fee hikes. Ask to review the HOA’s financial documents, including:

Reserve fund levels: Are they sufficient for major repairs, such as roof replacements or repaving shared roads?
Recent budgets: Do they show careful planning and spending?
Special assessments: Has the HOA had to charge homeowners additional fees for unexpected expenses?

Tip: A poorly managed or underfunded HOA can lead to costly special assessments, where homeowners are charged extra to cover deficits.

4. Review the Meeting Minutes

HOA board meetings are where important decisions are made about the community. Reviewing meeting minutes can give you insight into:

Current projects or disputes within the community
Potential changes to rules or fees
How proactive and transparent the board is

Tip: If the HOA seems disorganized or conflict-ridden, that could be a red flag.

5. Check for Legal or Compliance Issues

Some HOAs may be involved in lawsuits with homeowners, developers, or third parties. Ask if there are any ongoing legal disputes, as these can drain reserve funds and lead to higher fees.

Tip: Verify that the HOA complies with state laws governing homeowners associations. An HOA with legal troubles could complicate your homeownership experience.

6. Consider the Community’s Dynamics

HOAs are run by boards made up of residents, and their effectiveness depends on how well the community works together. Some things to consider:

Are board members approachable and professional?
Do neighbors seem satisfied with the HOA’s management?
Is there a strong sense of community, or do tensions seem high?

Tip: Talk to current residents to get a feel for how the HOA operates and whether homeowners are generally happy.