From the Ask the Broker files:
Hello ”“ I may be relocating to Phoenix from Ireland and have noticed that some homes listed say, “NO HOA!!!” which makes it sound like it’s a good thing not to have one. What exactly is an HOA and what are the advantages and disadvantages? I’ve been in the UK for almost 30 years and don’t remember HOAs being so prevalent when I was in the US.
Great question!
A HOA (Home Owners Association) — at least in Arizona — is typically created by the builder/developer of a subdivision. They are the “governing body” of the development and enforce the “CC&Rs” (Covenants, Conditions and Restrictions) and manage the common areas such as green belts, play areas, walking/biking trails, community swimming pools, club houses, amenities, etc.
Virtually without fail, once the subdivision is built out (or almost built out), the developer turns the control of the HOA over to the homeowners. At that point the HOA is managed privately by the homeowners, or a property management firm is contracted to manage the HOA. In either case, a homeowner elected Board of Directors overseas the management of the HOA.
Homeowners pay dues to the HOA. In the Phoenix area, these dues can vary wildly from one development to the next. Sometimes in a seemingly random fashion. Generally speaking, the more amenities and common areas a development has, the higher the association dues will be.
As with just about anything, there are advantages and disadvantages to an HOA. I’ll be honest, many people hate the restrictions some HOAs impose. Others seem to have no issue with them.
Advantages of an HOA
Proponents of HOAs typically site “maintaining or improving property values” as a major benefit. The developments CC&Rs will almost certainly have guidelines for things like landscaping care, exterior maintenance and even a “color pallet” that homes must comply with. There will probably be rules that have to be complied with like no parking in the streets overnight, no large vehicles, and activities that are not allowable such as certain home businesses.
In the sense that an HOA prevents your neighbor from painting his house purple, or allowing 4 foot weeds to consume the front yard, then yes, most HOAs do serve some purpose and help maintain neighborhood standards which in theory helps preserve home values.
Disadvantages of an HOA
“It’s my house, I’m paying for it and I ought to be able to do whatever the hell I want with it.”
As a real estate agent, I hear that mantra frequently. And I certainly understand the feeling. The removal of “freedom” is probably what annoys most people. Sometimes there appears to be haphazard enforcement of the CC&Rs. Then there are the annoying letters and fines that the “HOA Police” send out. I got a letter once saying that my satellite dish had not been “approved by the Board”. It had been installed on my home in compliance with the CC&Rs for three years. That seems just a wee bit silly. I also got a letter once that said my grass was too long. I have desert landscaping without a blade of grass. It took three phone calls to the management company to stop the fine process.
These letters and the control that some HOAs have annoy many people.
So do you buy in an HOA or not?
If you do some research, you will find horror stories of HOA Boards Gone Wild. Over two years ago I wrote, Incredibly inept HOA action!, which outlined one such out of control HOA board. And here is another sad tale right here in the Phoenix area ”“ Silly HOA Moves.
On the other hand, there are some great HOAs out there that do really good things for the community. My own HOA is one example, which I wrote about in, Why I *Like* my HOA.
A good (or bad) Board of Directors can make or break an HOA. Voting out an entrenched board can be difficult as let’s face it ”” many homeowners are apathetic about voting, and getting someone to agree to volunteer for an utterly thankless job is very difficult. The single best way to make your HOA better, serve your needs and be reasonably is to participate. You don’t have to get on the board. Just participate. I was on my HOA board for two years and could count the number of homeowners that regularly attended meetings on one hand.
In most of the Phoenix metro area, if you want a home newer than say 20 years old, it’s not really a matter of whether to buy in an HOA or not. It’s more a matter of which HOA to buy in. They just aren’t building homes in non-HOA areas for the most part (though a few can still be found in outlying areas).
The standard Arizona Residential Resale Purchase Contract and specifically the HOA Condominium / Planned Community Addendum clearly spells out the documents and time lines that a seller (or the HOA depending on the size of the development) are required to deliver and abide by to a prospective buyer. This includes such things as the CC&Rs, bylaws, and the financial status of the HOA. The astute buyer would be well advised to go over these documents with their agents in excruciating detail. The last thing you want to do is buy a home only to find out that something in the CC&Rs prevents you from doing something important to you.
Further reading: Here is a good article from a Phoenix real estate attorney regarding your rights in an HOA.
The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...
If you can find a neighborhood that is well maintained with good neighbors that doesn't have an HOA I would take that house 100% of the time. You'll save money and most importantly headaches.
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I think I tend to agree with you Spanish Classes.
(Note, if you enter Your Name@Spanish Classes in the comment name field, this blog will link to the keywords "Spanish Classes" and also display your name (unlinked). Then I wouldn't have to call you Spanish Classes!).
The problem is, at least in the Phoenix market, that finding ANY home in a non-HOA area isn't easy. HOAs are so widespread here that excluding them greatly reduces your choices. It can be done, but it's not easy. I'm not sure I'd want to give up some things I love about my home just to avoid an HOA.
Yeah I agree that you wouldn't want to exclude a home just because it has an HOA. I would recommend asking several neighbors what their experiences have been with the HOA just to make sure it is not one of the crazy Communist Regime HOA's.
Thanks for the tip about my name Jay.
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HOA dues are liked by some and hated by others. You have to look into what the HOA dues cover and the CC&R's for the subdivision before you make a choice. Here in Central Oregon, HOA dues are sometimes just for snow removal on the roads. That's not a bad thing!
I tend to agree with Spanish as well. HOA can be a really good thing, but it only takes a few busy bodies to make you really dislike the whole idea.
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Yeah in Indiana if you have an HOA they are very hands off, and like Dylan said, they are usually just for snow removal and pool maintenance. In Arizona they get very involved down to what you can have in your back yard, the color of your house, or just about anything else you can think of.
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There is no HOA in the neighborhood I'm in. Some friends live in an area that has one, and some of their experiences have been pretty bad. One of them actually had the same thing happen that you did with a satellite dish. Except that it was already installed on the house when they bought it and moved in.
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Maybe I missed it in the article, but can the HOA be a good thing for the raising of the overall value of a neighborhood?
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I have never seen as many HOA's as I have when I moved here to North Dallas. In the Florida burbs they were hit or miss. I got lucky here in that I got street that was built out with about 1118 houses, and no HOA, mail does not get delivered to the door.grrr, blame the builder for that too.
But anyway, overall value on this matter I have found is in the eye of the beholder, I have had some clients not willing to look at homes with them and others that will not without them — I think this all comes back from their personal experiences. I have heard of some nicknamed KGB, or Soup Nazi's. I always think any how should be worth taking a look at with or without, and then look at the neighborhood, if it is established, and people are taking care of their homes, pretty safe bet they will continue…if someone new moves in, and they want to have "the Shi**y house" on the block that is on them. I bet those neighbors who are keeping theirs nice, would start encouraging some landscaping, and the "new guy" may start getting rakes, and brooms with bows on them on their front step. Now with all that being said, I would think twice about a brand new subdivision, with no HOA, because we all know the turnover that happens in the first 2-3 years in those, and with todays market maybe even less, and more of it.
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In my neighborhood, an HOA was in place when the development was built to see that CC&Rs were upheld. There is not annual fee, and since the development has been finished, the HOA does not have the force it used to and it not as active.
But in Boise, Idaho almost every neighborhood has HOA's that charge a small annual fee (less than $100). For this you get common area landscaping and maintenance and a company that sees that the CC&Rs are upheld.
I have found that it helps to keep up the property values of homes in Boise, as rental homes have to be kept up to the same degree as owner-occupied. Absentee owners are held accountable for property upkeep.
Good read…My opinion is that HOA's are more impressive to older folks than to younger folks. Where you mention that people may think "It's my house and I can do what I want to it" probably is a quote a younger person would use. Most older folks in areas rich in HOA territory like AZ and FL prefer that their homes are upkept by HOA
**scott´s last blog post..700 Grove</abbr></abbr>
I have had some clients not willing to look at homes with them and others that will not without them — I think this all comes back from their personal experiences.I would think twice about a brand new subdivision, with no HOA, because we all know the turnover that happens in the first 2-3 years in those,
Great article, in Spain we call HOA "community association" or "neigbourght community". As a disadvantage i would say that this meetings are really boring but as advantages, a development with HOA aslo raise the prestige of living on it.
Interesting blog, greetings from Spain,
If you are in a HOA, be sure to encourage all rational residents to be active. Trouble makers without a life often use assocations to satisfy their lust for power (similar to politcal pressure groups).
Any one heard about KGB or Soup Nazi's.. i think its a nick name.. I always think any how should be worth taking a look at with or without, and then look at the neighborhood, if it is established, and people are taking care of their homes, pretty safe bet they will continue…hoa software
Any one heard about KGB or Soup Nazi's.. i think its a nick name.. I always think any how should be worth taking a look at with or without, and then look at the neighborhood, if it is established, and people are taking care of their homes, pretty safe bet they will continue…
hoa software
I found your article very interesting. My main concern regarding HOAs is that their increasing prevalence has eclipsed the laws that govern them, if there are any at all. Considering in Florida, where HOAs seem to be the norm, the State does little to regulate these corporations, and lobbyists for the industry have made it difficult for homeowners to fight back, should they be stuck with a runaway board. I have been involved in a situation that involves another neighborhood's HOA believing they are in charge of my subdivision. It has gone as far as the threat of legal action against my family. When contacting the state, I have been directed to lawyer up and go through mediation (which is a process established by the state, run by lawyers and property managers, to work out problems between homeowners and THEIR HOAs). In the case of mediation or a lawsuit, HOA statutes allow for the winning party to recoup legal costs, and in my situation, the HOA's lawyer had already indicated that they would seek reimbursement from my family.
Every time legislation regarding HOAs comes up, it always gets pushed to the back burner because lobbyists representing associations have more resources then individual homeowners. Organizations, such as the CAI, represent association's interests over homeowners.
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