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Pros and Cons of an Homeowners Associations (HOA)s

When I work with buyers, I make sure to always ask them how they feel about homeowner's associations, because there are those who love them and those who count them as dealbreakers. HOAs form the regulatory body for a neighborhood community and are responsible for maintaining the rules and regulations pre-established in said community. The board members are usually voted in by local homeowners, although sometimes an HOA is run by a private management firm. Whoever chooses to buy a home in an HOA consents to the HOA's administration and is required to pay a monthly/yearly fee that usually covers community improvements and common area maintenance.

How Do HOAs Start?

A real estate developer will typically implement an HOA after completing a community development. This is usually to keep the vision for the neighborhood a certain way and to sustain the status quo and level of order and upkeep. HOAs may be established in a neighborhood, gated community, row of townhomes, Co'op or condominium complex (COA)s. HOA/COA documents will be provided to a buyer once an offer has been accepted. Contingencies within the purchase agreement will provide time for the buyer to review those documents and for a buyer to terminate the agreement if the HOAs or COAs are not suitable for them.

Covenants, Conditions and Restrictions (CC&Rs)

CC&Rs are regulations and limitations set forth either by the established HOA or by a builder or developer. The CC&Rs are usually responsible for things like home/yard aesthetic, such as what colors/materials can be used on a home, what types of vehicles may be parked outside, whether or not you can plant gardens, and how high fences can be built. CC&R documents will also be provided to the buyer after an offer gets accepted and are reasonable causes to terminate an agreement if they are not favorable to the buyer.

Pros and Cons

While to some an HOA just sounds like unnecessary expenses and restrictive covenants, to others it could offer curb appeal, low maintenance, potential special amenities, 24hr security (in some cases) and the promise of an orderly neighborhood. Certain speed regulatory signs could mean a more safe environment for children to play, and gated communities can provide extra security as they monitor and regulate the comings and goings of traffic and some communities have fitness centers and/or pools onsite.

HOAs could also be a wonderful thing if you intend to leave the home empty or rent it out for part of the year while you are traveling or away elsewhere. Most HOAs will keep a thorough eye out for anything suspicious while you are away, although they do not take the place of property management. Keep in mind not all HOAs do allow for homes to be rented out. HOA dues pay for the upkeep of the roads and often will trim the trees and grass in all the common areas or even sometimes your own front lawn.

Although there are many benefits to living within an HOA, there are also some cons. Any additional building or outdoor landscaping/home improvement has to pass through the HOA, which will usually have strict rules in order to maintain a certain aesthetic. An HOA might even restrict whether or not residents are allowed to have pets.

The monthly fees on top of a mortgage, possible mortgage insurance, homeowners insurance, and property taxes might exhaust someone's budget, which is another possible disadvantage. It also might offset the debt-to-income ratio when a buyer puts an offer in on a home that equals the total amount they are pre-approved for. HOAs are shown to actually increase the value of a home despite the extra monthly expenses, in fact on average a home in an HOA will sell for 4% higher.


HOA fees can range widely, and the fee a resident pay depends on the house/lot size and purchase price. Fees can be as low as $20 per month and I've seen them as high as $1,000 (although they can go much higher). HOAs and COAs in Santa Fe usually sit somewhere between $50-$350/month, with the higher amount often being for Condominiums with security and many amenities. An HOA or COA may also charge an extra fee to cover bigger expenses. A few months ago I helped one of my buyers purchase a condo. The COAs monthly fees included an extra $50/month, that had to be paid until a year and half into the future to help cover the roofs they were currently installing on all the buildings. The HOA documents should specify if there are any special assessments coming up in the near future, which would have the potential to increase the monthly fee.

Your real estate agent should be able to tell you the monthly rates right away, as in most cases that information will be on the multiple listing service (MLS). However, it would be a good idea to look into how often and by how much an HOA has raised the monthly fees in the past. It is important to also note what the HOA fees do and do not cover, such as garbage disposal and recycling pickup, which could go either way.


HOAs must definitely be considered thoroughly. Make sure to understand all the facts of the HOA you are considering, such as their CC&Rs, what they do and don't cover, and their monthly fee. Also make sure you bring your real estate agent and lender into the conversation and maybe even seek out the opinion of a homeowner who currently lives in the community for further insight. It is also important to make sure the current sellers of the home you're interested in are currently compliant with the HOA. Hopefully this article helps you determine if an HOA is right for your family.

Please reach out to me at here if you have any questions!

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