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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.

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