Beth McCarter, mom of two and creator of The Travel Fam blog, had such a negative experience with her HOA that her family moved within two years of buying their first house. McCarter recalls coming home one day with both kids in the car and finding an HOA employee parked in her driveway. “She would not move when asked,” says McCarter. “She was taking pictures of my flower bed and handed me a warning letter. It was an extremely distressful experience.” McCarter has since moved into another neighborhood with a better HOA and says the experience has been “totally different.” An overzealous HOA may be more likely in a developing neighborhood. “The builder is motivated to keep everything cookie-cutter-looking because they are still selling homes,” says McCarter. Here are some more red flags to look out for before joining your local HOA. Special assessments are extra fees the HOA can charge members when there are insufficient funds to address any repairs or unforeseen damages (such as from a natural disaster) in the community. While some special assessments may be unavoidable, a community with low reserves and frequent special assessments can be a sign of a poorly-managed HOA. “Usually, if the HOA is 70 percent or more funded, they will be able to make all their repairs on time with enough cash flow,” says Scott Ford, president of residential real estate development consulting firm, California Builder Services. “If they’re less than 40 percent funded, walk away!” “Exterior improvement guidelines are intended to maintain the overall homogenous look and feel of a neighborhood,” says Chuck Vander Stelt, a realtor in Northern Indiana. “However, most HOAs have zero understanding of modern trends in exterior home design. This can cause homes in a neighborhood to get stuck in a time of a certain design era—which is bad for property values.” As a potential homebuyer, request the HOA’s CC&R (Covenants, Conditions & Restrictions) to get a feel for the rules and guidelines and whether they will be the right fit for you. “The latent effect of HOA ‘first right of refusal’ rules discriminates against minorities, single-parent households, and other marginalized people,” explains Vander Stelt. “If the board or the property manager isn’t transparent, or it’s difficult to get documents from them, this is a big red flag,” says Ford. He says this may be a glimpse into the culture of the community and could be a sign that the association has too much power—or is very disorganized and not following regulations properly. Be wary of HOA rules that say the association can only be dissolved with a vote every 10 years. If you’re a prospective buyer, don’t hesitate to request documents and other information from your HOA to see how they operate—it could save you a great deal of hassle.
