Q: What exactly does an HOA do?
A: Upon purchasing a home with an HOA, the buyer agrees to a long list of regulations governing such things as lawn care and painting. Each month, a homeowner pays a monthly HOA due. This fee can range from around $20 to over $300, depending on the neighborhood and local economic conditions. The HOA then spends the money on maintaining the appearance and safety of the member’s homes. Typically, an HOA maintains common areas, funds community perks such as a pool or clubhouse and routinely patrols the neighborhood to ensure that residents are keeping their properties well maintained. Residents that are found to be in violation of HOA regulations can be subject to a fine.
Q: What happens if I don’t pay my HOA dues or I fail to maintain my property to HOA standards?
A: In Nevada, HOAs can foreclose on your property for nonpayment, and in this housing market, many of them have done just that. With so many bank foreclosures on the market, many HOAs have raised their monthly dues to continue to meet their operating costs. This makes it even harder for struggling homeowners to pay the HOA, which in turn can lead to more foreclosures.
Failing to maintain one’s property can lead to costly fines, which can later be combined with late fees. HOAs fine residents as an incentive to keep their landscaping and exterior beautiful, but if a struggling homeowner can’t afford the gas to mow their lawn, imagine how rough it would be to keep up with fines and late fees.
Q: What sort of regulations do HOAs typically have on the books?
A: The regulations upheld by an HOA are called Covenants, Conditions & Restrictions, or CC&Rs. The most common of these are landscaping rules, such as keeping a nice lawn, and requiring approval before new landscaping is installed. Some HOAs also regulate the colors a home can be painted, junk cars and how long a resident can keep holiday decorations up. There are even HOAs that regulate the color of window treatments. Noise restriction and yard sale rules are also common. Be sure to read the CC&Rs carefully before purchasing a home.
Q: What are the benefits of an HOA? What are the downsides?
A: One common issue that arises between neighbors is that if one person has a poorly maintained home, the value of nearby homes drops. And besides, who wants to look across the street at a home with junk cars in the driveway, an ugly exterior paint job and a brown lawn overgrown with weeds? Strict HOA enforcement prevents issues such as these.
HOAs also allow the pooling of resources to improve the quality of life for residents. An HOA can provide a nice pool, workout facilities or basketball court that may have been out of reach to residents on their own. Many HOAs also provide security, such as night patrols, guarded entrances or security cameras, providing priceless peace of mind.
Having said that, HOAs have many criticisms. Since HOAs are run by people, and often by their own residents, fair enforcement of CC&Rs is sometimes inconsistent. This creates a breeding ground of neighborly resentment. And if you think that after paying off your mortgage you are off the hook for HOA dues, think again. That $20 to $300 a month is due every month for the rest of your life. Since we know an HOA can foreclose for nonpayment, this leaves you vulnerable to lose your home at any age.
HOAs have their place in our society, but remember that you accept their rules, in their entirety, upon purchasing a member property. Studying a community’s CC&Rs is an important step to take when considering a property. And consider the risks involved when looking at homes without an HOA.
Happy house hunting.
Annie Christian is a real estate broker and owner of The Annie Christian Real Estate Group. She helps with everything from buying and selling to foreclosure and short sale. To submit a question, call 351-5117. Her website is www.anniechristian.com.