New subdivisions, townhouses and condos are often governed by homeowner's associations. An HOA is made up of residents who are elected or appointed to the association and can make rules, impose fines for violations and manage the group's funds. Typically meetings will happen periodically that are open to all residents who would like to vote on new rules or air concerns. This type of structure can provide benefits to residents and help limit the risk of your property value decreasing based on neighboring homes.
Occasionally HOAs are voluntary and act more as a meeting place for residents than a governing body, so anyone considering buying a home should ask for a written explanation of any community organizations or associations and their responsibilities.
When an HOA is authorized to make rules and impose fines, there are certain benefits you can count on.
In the covenants, conditions and restrictions (CC&R) created by your HOA, you might find rules that establish quiet hours and regulate the exterior appearance of your home, according to Fox News. Living in one of these communities usually provides a quiet, calm environment since disruptive behavior is discouraged.
Rules regarding renting properties are firmly outlined as are regulations related to excessive noise and garbage maintenance. The goal is to limit bad behavior and create good neighbors. If you tend to entertain late into the night, you'll want to review your community's CC&R thoroughly to make sure you'll be a good personality fit.
In addition to behavior, there may be rules that limit what color you can paint your house or requirements for professional landscaping. Remember that the rules apply to everyone, so If you buy a property and choose to sell it five years later, you won't need to worry about your neighbor's house falling into disrepair and damaging the resale value of your home.
A large portion of your HOA fees will contribute to the upkeep of common areas. In a condo complex, that includes all hallways, the building facade and roof. For a subdivision, that could include pools, golf courses and neighborhood parks, explained Smart Asset.
Make sure to take a look at the fine print before buying a home in an HOA to ensure that you're comfortable with all fees and potential levies. For example, if there's a leak in a community building, common area charges could be raised significantly to cover it whether you use that facility or not. The benefit of this is that common areas will be well kept up since they're managed by residents and not reliant on a third-party company to pay for repairs. This can help maintain resale value as well since there's little risk of amenities being damaged or becoming unusable.