Homeowners associations can be a controversial topic … it seems their members either love ‘em or hate ‘em, depending on who you ask. But are these mini-governments really 100 percent good or bad? Let’s take an in-depth look at what HOAs are all about.

What is a Homeowners Association?

A “homeowners association” is the managing body of a housing subdivision or planned community, established by the property developer. Usually a non-profit corporation, the HOA board makes rules known as covenants, conditions and restrictions, which are implemented by either volunteers or a hired management company. To fund services like garbage pickup and landscaping of common areas, a homeowners association charges mandatory fees.

Homeowners Association Pros

Appearance. A homeowners association ensures an agreeable, uniform appearance for the community as a whole, regulating matters such as house paint colors, additions, and general upkeep. This tends to protect property values.

Services. The homeowners association fees often include convenient maintenance services such as pest control, garbage pickup, snow removal, and sometimes even lawn care and in-ground sprinkler systems.

Common areas. Often an HOA maintains common areas for the enjoyment of all residents – for example a swimming pool, private park, barbecue area, tennis court, golf course, clubhouse and/or rec room.

Security. An association frequently provides homeowner security in the form of a gated community or an organized neighborhood watch.

Community. The board mediates disputes among residents and ensures quiet in the complex. People active in their HOA usually claim it’s a good way to get to know the neighbors and build a sense of community.

Homeowners Association Cons

Fees. HOA fees typically run about $200-300 monthly for a single-family home (although they vary widely). This can make a big difference to your homeownership budget … which lenders take into account when assessing mortgage applications.

Assessments. As a rule, most homeowners associations are underfunded and raise money for large expenses via special assessments. Assessments are adopted by majority rule; those who vote against them still have to pay, to the tune of hundreds, perhaps thousands, of dollars on top of the standard fees.

Mandatory repairs. Often if there's the slightest need for exterior repair to your home, the HOA allows no grace period; they pursue you with written warnings and eventually fines, until the repair is made. Also, an association may have a list of professional contractors you must use. Heaven help you if you pick someone not board-approved. 

Limits on home improvement. In contrast to the previous point, you may actually want to update your house’s exterior appearance -- for example, by hiring a contractor to build a deck. In this case, the association may drag its feet in approving your plans … or veto them altogether.

Excessive power. Many owners feel HOAs hold too much power, dictating the allowable number of residents (humans and pets), type of fencing, and even the length of your grass … to name just a few examples. FRIGHTENING FACT: If someone gets behind with the fees, the association might even have the power to foreclose on their home.

One Homeowner’s Experience

Victoria N. and her husband have owned their home for the past 20 years. Every quarter, they pay a modest HOA fee, which covers management services, as well as maintenance and gardening for the public areas.

Victoria acknowledges her homeowners association’s role in keeping the complex neat and attractive. She likes the balance the HOA has achieved between nicely groomed gardens and more rambling, woodsy areas. However, she believes the association is largely unnecessary (because the township already regulates permissible property condition) and even annoying.

To illustrate, she tells this story. One sunny afternoon, a little neighbor girl washed some Barbie clothes and hung them on a bit of string to dry. The very next day, her parents received a stern letter, citing the HOA rule against clotheslines … an example, Victoria says, of board members with “too much time on their hands.”

When You’re House Hunting

Compare HOA fees and amenities of homes on your shortlist. What would you be likely to use and what do you consider a waste of money? If you don’t plan to stay in a home long term, take into account how those fees and amenities will affect resale.

Inspect not just the home for sale, but common areas, as well. Make sure they’re nice-looking and well kept; after all, you’ll be paying for them.

Consider location. Victoria N, the homeowner mentioned previously, claims that near neighbors of HOA board are most often cited for violations of the rules. If you like your privacy, you might be better off in an out-of-the-way location, rather than the development’s main street.

Find out about fees. What is the current amount and what services does it cover? How much are fees likely to increase, based on historical precedent and the current reserve fund?

Check policy regarding rentals. Are you looking for an investment? Oftentimes, a homeowners association reserves the right to vet prospective tenants. Some may impose a quota on the number of rentals allowed.

Read the fine print before buying a house under an HOA. Learn the rules and how they can be changed, as well as when HOA meetings are held. Investigate penalties for non-compliance and foreclosure for non-payment of fees. This info is available from the homeowners association itself, your real estate broker, or the county clerk’s office.

Go through board meeting minutes, too. Pay attention to the tone of the proceedings. See whether the HOA is in sound financial shape and if it has ever sued a member. Money trouble and lawsuits are not only messy and unpleasant, they can also affect your loan application and your home’s value.

Verify your dream home’s compliance. Buying a house is complicated enough. Don’t inherit the headache of sellers who are in the homeowners association bad books, whether through non-payment of fees or non-compliance with the rules.

Laura Firszt writes for networx.com.