HOA 101: Follow the rules and you won't get hurt

They say rules are meant to be broken, and for some people — the criminal kind, at least — that's true. But for the folks who enjoy nesting in a community or neighborhood governed by an HOA, rules are king.

You live by them. You swear at them. And, goodness forbid, don't you dare break them.

Yet, despite the oft-rigid nature of homeowners' associations, living under their watchful eye is so common nowadays that more than 63 million Americans dwell in HOA-dominant communities, according to the Community Association Institute.

Most HOAs are devoted to manicured lawns, protecting property values and keeping common areas so fresh and so clean clean. But before you sign the (legally-binding) paperwork, learn some of the basics.

Living with an HOA

HOAs are legal corporations comprised of boards or committees of resident volunteers that set and enforce the rules, regulations and perks of living in a particular housing development, subdivision or complex.

When you buy an HOA property, you automatically become a member of the association. You have to agree to a series of covenants, conditions and restrictions (aka CC&Rs), which outline all the HOA's requirements, and sign a legally-binding contract saying you'll abide by the rules (no blood oaths or animal sacrifices required).

So, what are the rules?

They vary, depending on where you live and the personalities of the people sitting on your HOA's board. Common stipulations may include keeping your grass trimmed and yard weed-free.

But keep in mind that you're dealing with people who may not be well-versed in law or business and might make rules that border on the ridiculous or inane. Or, you could live in an area where the HOA is managed by a private company — people who don't live in the neighborhood — and may not care about the property as much as you do.

An HOA's capacity to impose rules also varies depending on the development and state where you live. For instance, some HOAs can issue fines if you violate a rule in the CC&R, or place a lien on your property.

Pay up

By now, we all know homeownership requires strict budgeting. If said home is in a subdivision or condo, add HOA fees to your list of monthly or yearly expenses.

Like the rules, the fees can vary but the general rule of thumb is the more upscale and ritzy the property and amenities, the more you pay. That money is thrown into a fund the HOA uses for property upkeep and maintenance, whether that means keeping the playground pristine, swimming pool bacteria-free or elevators going up and down when they're supposed to.

Let's say you don't pay your fees. Surely, you can talk it over with your HOA president and ask for some sort of deferral or payment forgiveness, right?

Probably not. Because you signed a contract, the HOA has a legal right to take you to court and even foreclose on your property if you're negligent in doling out your dough year after year.

DIY lovers, beware

If you've compiled a wishlist of decorative designs and DIY projects for your dream home, living in an HOA-controlled community may stifle some of that untapped creativity. Sorry, but when you're subject to an HOA, there's only so much customizing allowed.

What do we mean? HOAs can forbid you from painting your house a certain color; decide what size and kinds of pets can live on your property; and set limits on the type and number of cars you can park in your driveway.

The takeaway: If you don't like people telling you what to do, then living in an HOA community will probably make you upset. All the time.

But hey, there's an upside: Your artistically inspired neighbor won't be able to paint his or her home in pukish green or, heavens forbid, polka dots.

Low maintenance

OK, so far, we've been a little hard on HOAs. Until now. One of the best things about being part of an HOA is that little maintenance is required on your part (as far as aesthetics are concerned).

No, the HOA will not pay for repairs to your busted toilet. But, depending on the type of housing and neighborhood you choose, it may handle all of your lawn care, or pay for your garbage pickup.

Just keep this in mind: The HOA should always make sure the neighborhood looks good.

One big bonus of an HOA is that it protects against bad neighbors who would otherwise turn your sanctuary into a sanitarium. Because of its standards, an HOA means no "Frat Star" neighbor throwing wild parties and no "Overachiever" revving their lawnmower at 4 a.m. (for more bad neighbors and how to spot them, read our blog about it).

You can get involved

Another benefit of living in an HOA community: You have a voice. If you don't like how your community's governance operates, attend an HOA meeting, where policies, changes and issues are discussed.

Maybe you feel the swimming pool hours are inconvenient. Or, perhaps you're sick of your persnickety neighbor making snide comments about the number of petunias growing in your flower bed. Propose a change.

Many HOAs adhere to open meeting laws, meaning residents must be notified in advance of meetings, receive a copy of the meeting agenda and have access to meeting minutes. That also means board members can close the meetings to residents so they can enter executive session to discuss litigation, contracts or a particular resident's problem with paying fees.

Each state has different laws on how frequently HOAs should hold community meetings so be sure to check yours. The frequency of board meetings will typically be outlined in the HOA's bylaws.

Where can I learn more?

You can give a call to one of our adept loan officers who can give you the download on what to expect from an HOA.