Looking to buy in a community with an HOA? Here’s what you need to know about your membership options.
Say you’ve found your dream home, but it happens to be in a neighborhood with a Homeowners Association, commonly known as an HOA. There are plenty of rules and regulations you’ll have to follow as a new resident—not to mention the dues you’ll have to pay. When considering whether the property is worth the costs, you might be wondering whether you have to become a member in the first place. The short answer? You probably do.
“It’s very important to consult a real estate attorney to understand your rights as a buyer under an HOA particularly because the rules vary greatly based on state and region,” says Shaun Pappas, a partner at Starr Associates LLC.
If you're not sure where to start, we spoke to some real estate experts who weighed in on what your rights could be when it comes to joining or refusing to join an HOA.
How HOAs Work
An HOA is an organization that oversees a small area or neighborhood, operating much like a small local city government. Each HOA has its own set of covenants, conditions, and restrictions, which are often referred to as CC&Rs. An elected board of HOA members set and enforce those CC&Rs, but not every decision is completely up to them.
“Homeowners have the right to attend and speak at HOA meetings, vote on HOA matters, access HOA documents, and ensure the HOA is acting in accordance with its governing documents and local laws,” says Eileen Lacerte, an owner and broker at Better Homes and Gardens Real Estate Island Lifestyle. “If a homeowner believes their HOA is not acting appropriately, they can potentially take legal action against the HOA.”
Plus, according to Pappas, rule changes and amendments to by-laws are sometimes dependent on the approval of a set percentage of homeowners who live within the HOA's territory.
When you join an HOA community, you pay dues in exchange for access to certain services and amenities such as community pools, gyms, and parks. You might also gain access to security and a gated entrance to the community because of these dues.
Another key benefit of an HOA is that those in charge are also looking to preserve certain aesthetics within the neighborhood, so you won’t have to worry about your neighbor getting away with not mowing their lawn all summer. The flip side, of course, is that you must also follow sometimes strict rules regarding everything from landscaping to home decor and pet policies.
“The key benefit of living in a community with an HOA is the peace of mind that comes from knowing your property values are maintained, that common areas are routinely taken care of, and that certain standards for quality of life are upheld,” says Mark Buskuhl, founder and CEO of Ninebird Properties. “Besides, by pooling resources through shared dues, homeowners can potentially enjoy amenities like community pools or fitness centers at a reduced rate.”
Are You Required to Join Your HOA?
Unfortunately, you cannot refuse to join a Homeowners Association, according to Chis Gooch, an attorney with Fennemore.
“If you purchase a home or condo that is subject to recorded CC&Rs, then you have effectively agreed to be subject to those rules and governance by the HOA," says Gooch.
In fact, refusing to pay dues or abide by the HOA’s rules could lead to some serious consequences. Gooch says than an HOA will typically start by fining a resident who fails to pay or follow the rules.
“These fines and penalties can accrue over time and the HOA can sue the homeowner for breach of contract, because the CC&Rs are seen as a contract among the homeowners,” Gooch explains. “This can result in a judgment being recorded against the homeowner’s property and could eventually lead to foreclosure by the HOA.”
Lacerte says she’s had several clients who have opted not to view homes within HOAs for fear of having to abide by their rules. In her experience, living outside of an HOA is the only way to avoid fees and rules.
“When you purchase a home within a community that has a Homeowners Association, membership is typically mandatory,” she says. “I’ve personally never sold a property where there was an option to join or not.”
Knowing you won’t have an option not to join an HOA, you’ll want to be sure you go over all of the CC&Rs in place before closing on a home in one of these communities.
“When buying into an HOA, it is up to the agent and—more importantly—the attorney to clearly lay out the covenant and what the buyers are agreeing to,” says Jim Bergeron, a broker associate with Baird & Warner based in Naperville, Illinois. “In Illinois, part of the closing process involves reviewing documents that outline the financial health of the HOA, including its operating budget, amortization schedule and cash reserves as well as providing all documents covenants.”
There are a couple of circumstances that would allow you to refuse to become a member of an HOA—the first being that the HOA formed after you purchased your home.
In some situations, there are HOA rules that specifically make membership voluntary. In those communities, joining is up to you, but you’ll likely forfeit access to certain services or amenities if you choose not to officially join and pay dues. For this reason, many home buyers opt only for homes without such governing bodies in place. This is the best way to avoid joining an HOA, experts say.
Pappas says it’s unlikely that you’ll be able to skirt certain HOA rules you don't like, too, so be sure to review all of the community’s CC&Rs before committing to a purchase. In rare circumstances, you might be able to ask the board for a waiver to a rule, but you’re not guaranteed to get your way.
“I would not advise anyone going into such a purchase to buy with the reliance on the belief that the rules can be modified for them and them alone,” says Pappas.
So if you’re planning to store your boat in your driveway, paint your home bright orange, or fence in your front yard, think again.
“The primary drawbacks or limitations associated with HOAs are related to their enforcement of rules and regulations,” says Buskuhl. “While some may consider these restrictions to be helpful in maintaining community standards, they can also be overly restrictive for some homeowners who want more freedom to express themselves through their property and lifestyle choices.”
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