Before you purchase a property subject to HOA rules and fees, make sure you know exactly what you are getting into.
HOA's are most often found in residential developments built after 1985. These organizations are usually included in condo, townhome & common interest developments, which is why you will find a staggering number of HOA's here in Southern California. If you are looking to buy or already own one of these properties, you should know the "10 Things I Hate About HOA's" listed below, and how to possibly outsmart these limitations.
1. HOA's are just another outside party looking to govern your lifestyle
Typically, HOA's control what color you can you paint your house, what type of fence you are allowed to install, and what kind of windows you can put in. All in all, they are another layer of rules and regulations to follow.
If you want to overcome any of their regulations, beat them by knowing the rules before you break them. If you want something that differs from these rules, you can ask for a "variance." Make sure you have good reason that will not negatively affect the quality of life of your neighbors and it could possibly be granted.
2. HOA's have the express ability to impose fines, liens or even foreclose on your property for unpaid dues, assessments or fines. Make sure you pay particular attention to these rules before you buy.
The only way to bypass any of this is by learning the process for changing or adding rules. If your HOA is too restrictive you may consider buying elsewhere.
3. All the RED TAPE
If you want to remodel the inside or outside of the home, the process is tiring and daunting when considering an HOA. You may have to wait months and months, attend HOA meetings and fill out an application with thousands of pages to even ask for approval!
Overcome the madness by speaking to owners who have lived in the community a long time (preferably not board members). Find out how difficult it is to make landscaping changes or make upgrades. Be alert for potential drama since power trips and politics can be an issue in some HOA's. If the HOA is managed by a property management company do your research on how they communicate. Meet the President of your board and get a sense of whether or not you want that person in charge of making decisions regarding your property.
5. Hazard Insurance - it's always good until it's bad, then it's a disaster.
This one tends to go unnoticed until it is too late. Research what kind of catastrophe insurance your HOA holds and how much it covers so you can supplement with additional insurance. Tip: Usually, the insurance the HOA provides will not recover all of your expenses in the case of a true disaster.
6. Under management issues
We talk a lot about overbearing HOA's, but what is even worse is an HOA that takes your money every month and does nothing to support the community.
Beat the system by joining the system. Find out how you can get on the board, rally the votes, and make things happen within your community!
7. Many HOA's limit environmental practices, such as banning solar panels, xeriscaping, composting, and even limit the size of gardens.
Avoid this by knowing yourself and your HOA before you move in. If you are an "earth lover" and your HOA is anti, know it and avoid it before you break your hippie heart.
8. Rental Problems
Some HOA's do not allow owners to rent their property to others, or they limit the number of rentals within a complex at a time. If you plan on using your home as a partial rental while you continue to live there, or as an investment rental property down the road, you will want to look into the rules of your HOA before you commit.
9. Unexpected Assessment & Fee Increases
Sometimes homeowners can be hit with huge assessments for upcoming improvements needed in the complex, or be surprised with continual hikes in their monthly dues that change the affordability of a home within a matter of a few years. Before you buy a home ask these questions: How are the HOA fee increases set? How many times have the dues been increased in the last 10 years? How much is in the HOA reserve fund? Avoid those with a lot of financial and/or structural issues that need to be addressed in the future. Don't walk... Run!
10. The Sheer Cost
When you buy into an HOA the dues are just never going to go away. Know what your payment is covering. Your fees could include landscape maintenance, roof maintenance, trash, water, and insurance, but not always. Some HOA's cover extras you may not even know about such as pest control or basic cable.
Knowledge is power! Know exactly what you deserve and make sure you get it. If the cost just doesn't make sense to you and you don't need extra amenities, maybe you are better off buying for a higher sales price in an area without an HOA.
Summary: HOA's can be your best friend when they prevent your neighbor from painting his house neon pink, but your worst enemy when they expect you to perform expensive maintenance on your home that you don't think is necessary. Investigate and do your research before you commit to this lifestyle.