The story goes like this: A homeowner’s association (HOA) told a homeowner that a dead tree had to be removed. The homeowner had professionals come and remove the tree, and then received a fine from the HOA because the homeowner hadn’t gotten permission from the HOA to remove the tree.
While it’s difficult to tell if the story is true or where it originated, the story has become the stuff of legend on Internet forums and social media. It is held up as a prime example of how an HOA can go from being a well-intentioned entity to a bureaucratic nightmare.
But HOAs that work well can have great benefits for residents. There are more than 370,000 HOAs in the United States today that include more than 40 million households, according to HOA-USA, a informational resource and association for HOA governing boards. The concept of HOAs started in the mid-19th century and has evolved over time.
The first were in California, including the Arroyo Seco Improvement Association in Pasadena (c. 1905) and the Los Feliz Improvement Association in Los Angeles (1916). The first planned community was in Levittown, New York and while homeowners had to follow certain rules according to their property titles, it didn’t have a formal HOA.
By the 1950s and 1960s, HOAs became more popular. Sadly, many were formed as a way to make it more difficult or impossible for certain races, culture or ethnicities to move into certain neighborhoods. A Supreme Court decision in Shelley V. Kraemer (1948) determined that HOAs could not discriminate in this way. Instead, HOAs stopped writing such rules but often continued to refuse approval of property sales to many minority groups.
Today’s HOAs have three things in common: mandatory and automatic membership that starts with home ownership in the designated community; legally binding documents giving the HOA authority to exist, create rules and enforce those rules; the power to put liens on properties as a mechanism to enforce rules.
The rules and regulations that HOAs put forth in any given community are generally meant to ensure that the homeowners’ maintain their property and thus local property values. This can include everything from minimum requirements for landscaping and property maintenance to regulations about the color of your front door or political signs.
“A well-run community uses the funds collected by the HOA to keep the grounds looking great, so you can usually count on an attractive community,” said Kim Peele, Realtor at McEnearney Associates. “Many HOA communities also have nice amenities, such as a pool, tennis courts and playgrounds that are included in the fees. There are usually nice events in the community, so you get to know the neighbors. And if you ever have an issue with a neighbor, you can often times ask the HOA officers to step in and help resolve the matter.”
HOAs can also have regulations that go above and beyond city or county ordinances, including rules about noise, parking, parties, living arrangements, hoarding and more. The rules are typically meant to keep neighborhoods attractive, clean, safe and pleasant for all residents. It’s unlikely that your neighbor’s rusty car will be on blocks in the front yard.
ut there are drawbacks, too. The average HOA fee for a single-family home in 2022 was $250 per month, nationwide, adding $3,000 per year to the cost of housing, according to national housing data. There may be periodic assessments on top of that, depending on the needs of the community.
“It’s very important to review the HOA documents, to make sure that they are charging enough to the community, because if they are not well-funded, the amenities and grounds will suffer,” Peele said.
In addition, there may be rules about things like the color of your door. Want the trendy pop of yellow, or did you fall in love with the Benjamin Moore 2022 color of the year October Mist? Not possible if your HOA doesn't include them on the color pallette.
“Another reason some homeowners don’t like an HOA is that the HOA board members have a lot of decision-making power, so if you don’t like the personalities and agenda of the members, it can be unpleasant dealing with an HOA. Lastly, you don’t have as much freedom as you would if you lived in a community without an HOA, because HOA’s often dictate fence heights, door colors and more,” Peele noted.
If you’re buying a home in a community with an HOA, Peele recommends doing some research first, including reading the HOA’s documents that will be provided to you before closing on the property. In addition, Peele recommends reading the HOA meeting minutes to see what current issues the organization is handling and talking to neighbors, too.
“We always tell our buyers to focus on the financial documents, to be sure they are well-funded, so that they don’t increase the HOA fees anytime soon, or — even worse — ask all of the owners to pay a ‘special assessment’ to make up the shortage in their budget,” Peele said.
