Many subdivisions, planned communities, and multi-unit buildings have a homeowners association (HOA) that makes and enforces rules for the community. In most cases, if you want to own property in the community, you must join the HOA.

It’s not necessarily a bad thing. Homeowners associations provide numerous benefits, such as managing various shared amenities, such as recreational facilities, and keeping the property looking its best, which enhances home values.

If you’re interested in buying a home that’s governed by an HOA, be sure to investigate these and other potential pain points:

1. Membership fees 

Most homeowners association fees range from $200-$400 a month. For example, if an HOA is only responsible for maintaining a private road that connects residents to a public street, monthly fees could be well under $100. 

However, at high-end communities that offer many shared amenities, fees can exceed five figures.

Make sure the HOA fees for the property you want to purchase won’t break your budget and are reasonable, relative to the services you’ll receive, such as removing the garbage, cleaning the gutters, mowing the lawn, and shoveling snow.  

2. Parking 

In urban areas where parking options are limited, residents may compete for enclosed garage spaces or exterior parking, based on HOA rules, potentially including special parking assessments. 

Can the current owner transfer their space to you? Or will you be placed at the end of a waiting list? Parking options and costs could significantly impact your budget and where you want to live.

3. Special projects 

In addition to ongoing property upkeep, such as landscaping and elevator maintenance, HOAs may occasionally need to tackle major projects, like replacing roofs or repairing brickwork. 

The substantial costs of these initiatives typically require imposing a special assessment on residents, on top of regular association fees. As a potential buyer, ask for copies of the minutes from recent HOA meetings, as well as the budget, and see if major assessments are on the horizon.

4. Restrictions 

One key advantage of being a homeowner, instead of a renter, is the freedom to personalize your living space based on your preferences, priorities, and budget. 

In a community governed by an HOA, however, some of your choices will be limited by various covenants and restrictions.

For example, you may not be able to plant a garden, or install a fence, or paint your front door specific colors. Such restrictions may prove frustrating but are designed to maintain a consistent, attractive appearance within the community.

Also check for occupancy restrictions, which can limit your ability to rent your home to non-residents on a short- or long-term basis.

5. Management 

Most HOAs are operated by volunteer board members who are owners and residents in the building or the community. On the plus side, this means the board is populated by people who have a vested interest in making superior decisions on behalf of all residents. 

However, there’s also a risk that board members will become mired in disagreements or lack the skills needed to manage an HOA successfully. Schedule a time to speak to the board president and get a better sense of how well the association leadership is working together.

6. Lenders 

If you’re applying for a mortgage to purchase your home, your lender will factor HOA fees into the final approval process, potentially reducing how much you’re allowed to borrow, even if you’re already pre-approved for a loan. 

The bank, for example, may ask to review a copy of the HOA’s budget before finalizing your mortgage, to ensure the association is on solid footing.

Buying a home that includes membership in an HOA introduces many unique considerations. However, for many homeowners, they are a highly desirable option. 

Just make sure you are working with a qualified buyer’s representative who is familiar with these issues and can successfully guide you through the process.