Is a homeowners association right for you?

HOAs offer perks but can also come with drawbacks

An increasing number of American homes are part of homeowners associations. But are they right for you?

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Homeowners associations can be found in a range of communities from condos to suburban subdivisions. There were about 347,000 community associations in the U.S. as of 2018, according to the Foundation for Community Association Research. And more than a quarter of the U.S. population was living in community associations.

There are many advantages to homeowners associations, which are commonly referred to as HOAs, and serve a function similar to a local government, setting rules and paying for shared items.

Many HOAs provide amenities like a pool, clubhouse or tennis courts. They also often handle routine matters like landscaping and garbage removal and some maintenance issues, generally exterior repairs like roofing.

Couple looking at a house online at home. (iStock)

IS A CONDO OR CO-OP RIGHT FOR YOU?

HOA rules can protect you from having to look at something bizarre a neighbor would otherwise be able to put on their property. But they can also prevent owners from doing something that seems reasonable to them, like painting their home a certain color or putting up a flag.

Those protections can help protect the resale value of a home. A study published in the Journal of Urban Economics last year found that houses in HOAs have prices that are an average 4 percent higher than similar houses not in HOAs.

There can be other downsides. The biggest one for many people may be the cost, which can run as high as thousands of dollars each month on top of a mortgage and property taxes in luxury skyscrapers or high-priced suburban communities with desirable amenities like lakes or golf courses. But the average HOA monthly fee was $331 as of 2017, according to Trulia.

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WHAT IS A MCMANSION?

HOA bylaws can prevent you from adding on to your home and set strict requirements for your home's appearance. Breaking those rules can result in fines, and potentially costly work to undo any non-permitted home improvements. Refusing to pay the fines can lead to the HOA placing a lien on the home.

There have also been rare cases where residents of an HOA were surprised to learn that they were responsible for a small dam in need of expensive repairs or where a person in a leadership role has embezzled money from the community.

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To prevent something like that from happening, it's generally a good idea to get involved with the HOA's board and attend meetings for anyone who does live in an HOA community. In addition to knowing what's going on, they provide an opportunity to meet neighbors and settle disputes.