In many communities, homes aren’t just part of a neighborhood. They’re part of a homeowner association, a body that regulates certain aspects of homeowner conduct, a home’s appearance and common areas in a neighborhood.
In Arizona, more than 30% of homes are in communities that have homeowner associations, which is considerably higher than the national average of about 22%, according to industry statistics. In fact, Arizona ranks fifth in the nation for its number of HOAs and second in the nation for its average dues, which industry estimates peg at about $450 per month.
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In some communities, those dues cover access to lifestyle amenities, such as sport courts and swimming pools. Dues in communities without those amenities are often used for common area maintenance, parks and playground upkeep and sometimes even community celebrations and gatherings.
HOAs have long been debated for their benefits and drawbacks, as some have made headlines for their policies and perceived overreach. And those stories make headlines because they are often the exception rather than the rule. Here are a few common HOA regulations that homeowners might want to be aware of before closing on the purchase of a property in a community with a homeowner association.
HOA role. Each HOA is unique to its community, following its own established set of rules and regulations (known as CC&Rs). The board that governs the HOA has the authority to levy fines against and collect dues from homeowners. The role of the HOA is to enforce policies that help maintain property values in the community.
HOA scope. HOAs have the ability to regulate a number of activities in a community, and some of those rules include architectural restrictions, decorations, landscape maintenance, parking, pets and rental policies. Communities without HOAs to enforce community expectations need to rely on neighbors to help keep a neighborhood looking its best. Sometimes that works and sometimes it doesn’t.
HOA enforcement. HOAs are bound to enforce the policies they adopt, which is why they dole out fines for homeowners who violate rules — from parking infractions to neglected landscape maintenance to rentals that aren’t in line with what the community permits, all of which are among the most common HOA violations. Others include off-season holiday decorations, barking dogs and architectural changes that have not been authorized.
HOA fees. In addition to monthly HOA fees, the purchase of a home in a neighborhood with an HOA comes with a handful of fees to complete the transaction. The HOA transfer fee, which averages around $200-250 and covers paperwork associated with the transaction, typically falls to the buyer. A disclosure fee, which is the responsibility of the seller, is associated with the transfer of governing documents to the buyer — including CC&Rs and bylaws. Capital improvement fees, which are used to bolster the finances of the HOA are generally collected when a property closes. Deciding who pays is part of the purchase negotiation. .
While HOAs work to maintain a community’s value, and in that effort try to keep with a certain aesthetic look to the homes, it is important for homebuyers to consider if they want to live in that type of environment. If a homeowner is looking for more freedom, when it comes to parking and architectural design, they may want to shy away from a community with an HOA. That type of arrangement just might not work.
But, the trade-off means that the homeowner will need to tolerate or reconcile with neighbors who also want to exercise their freedom to park where they want and explore whatever architectural look they choose.
As with anything, there are benefits and drawbacks to both. It’s just important to understand the expectations going in, so the relationship — either with an HOA or with neighbors in a community without an HOA — is as smooth as possible for everyone involved.
If you’re considering a home purchase or sale, the team at Halpern Residential is ready to help. We keep an eye on market trends so you don’t have to. Moving or investing in real estate is an exciting time of transition, and we’re ready to help you with it. Contact us today so we can learn more about how we can support your needs.
Author: Trevor H. Halpern, J.D. is the #1 independent agent at Phoenix-based North&Co. and the CEO of Halpern Residential. As a Phoenix native, Halpern’s deep knowledge of both people and property has allowed him to create client success in all areas of town.