The Pros & Cons of a Homeowners Association (HOA)

When you buy a home that is part of a homeowners association, or HOA, for short, you agree to live according to the association’s rules and pay a fee (often monthly) that contributes to the overall maintenance and management of the community. Living in a neighborhood with a homeowners association has its advantages and disadvantages. For instance, those HOA fees we mentioned could be steep and severely drive up the cost of your prospective abode. But paying the charges also entitles you to certain services — like, say, snow-shoveling in the winter or pool maintenance in the summer — that you would have to do yourself if you were living outside an HOA. Here we’ll break down the meaning of “homeowners association” and review their major pros and cons.

What Is a Homeowners Association?

A homeowners association is an organization founded by a real estate developer in order to manage a community of houses, townhouses or condominiums. According to the New York State Attorney General’s website, this association “is given the authority to enforce the covenants, conditions, and restrictions as well as manage the common elements of the development.” In order to belong to a homeowners association (and, subsequently, live in the community it oversees), you’ll have to pay its dues. These dues can run from under $100 a year to over $1,000 a month, depending on the community.

That’s why it’s important to note before you buy a home in such a neighborhood whether you can live with its rules. You’ll also want to consider if the community’s amenities and benefits make sense for you and your family.

Plus, your association fees are included in your mortgage lender’s assessment of your monthly mortgage payment, so it’s important to make sure your credit score is in great shape to qualify for the loan amount you need. You can check your credit scores for free on Credit.com.

Why pay a monthly association fee to abide by rules you don’t like and cover the costs of a swimming pool and tennis court you aren’t ever likely to use? Here is a look at some of the advantages and disadvantages of homeowners associations to help you decide if an HOA-run community is right for you.

What are the Major Pros & Cons of a Homeowners Association?

Con: The Homeowners Association (HOA) sets the standards for your home.

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One disadvantage of living in a home that is part of a homeowners association is that the association gets to determine what is an acceptable appearance for your home. The paint color, where you park your car, how often you clean your roof or mow your lawn, the landscaping of your front yard and how you decorate your home’s exterior for the holidays may all be scrutinized by a homeowners association.

If all of these rules seem reasonable to you and are in line with how you are likely to maintain your home anyway, this community may be right for you. If not, you may want to consider other housing options.

To learn about the specific rules of a homeowners association, you can reach out to the homeowners association directly or visit your county clerk’s office, since homeowner association rules and restrictions are a matter of public record.

Pro: A Homeowners association handles disputes between neighbors

One advantage of a homeowners association is mediating disputes between neighbors. So, for instance, the association will contact a neighbor about a noisy dog or loud party, not you. And there may very well be a rule about noise levels after hours that the association will be able to enforce.

Con: Falling behind on HOA dues can lead to foreclosure.

This is another reason you’ll want to make sure those HOA fees are in your budget. A HOA can move to foreclose on your property if you fail to pay its dues and/or associated late fees. Laws can vary by state. A few, for instance, place limits on when an HOA can move to foreclose. So if you’ve fallen behind on payments, you may want to consult a local attorney about your best recourse. (You can learn more about how to save your home from foreclosure here.)

Pro: A Homeowners association manages common areas in your neighborhoods

Homeowners associations handle the upkeep of swimming pools and tennis courts and other recreational areas so the common areas and shared amenities in a neighborhood are likely to be maintained in a good condition.

This article has been updated. It was originally published on October 21, 2014.