10 reasons first-time homebuyers should avoid the HOA, condo, or co-op

By Deborah Goonan, Independent American Communities


The real estate market is going strong. And the HOA-industry is going out of its way to woo first-time homebuyers, especially millennials.

But before you write that deposit check, and sign the mortgage papers, and agree to live under HOA rule, review this ten-point buyer beware checklist.

Here are the top ten reasons to avoid mandatory membership HOAs – including condo, and co-op homes in planned, mixed-use, and common interest communities.


1. Monthly, quarterly, or annual HOA fees add up.

The real estate sales and management industry loves to sell home buyers on amenities such as swimming pools, tennis courts, walking trails, roof decks, fitness centers, and more. But the cost of maintaining these common amenities adds significantly to your monthly expenses.

The more you pay in HOA fees, the less you can spend on a mortgage payment, your annual vacation, or weekend fun with family and friends.

And, the truth is, most homeowners don’t use their community amenities that often, after the novelty wears off.

And, get this: even if you never put a toe in the community swimming pool, you’re obligated to pay HOA assessments, as well as the cost of any future repairs.

Warning: non-payment of your HOA fees is not an option. Your HOA can put a lien on your home, get a court-ordered money judgment to collect its fees with interest and penalties, or even sell your home through foreclosure to collect their money.

Most states also allow HOAs to treat fines as assessments, or to rename them as assessments. Therefore, unpaid fines also put your home at risk for foreclosure.

For a more affordable, less risky alternative, consider buying a home located near a public park, a walking and bike path, or a swimming pool. Your tax dollars already pay for these recreational facilities.

Or, if you prefer, join a nearby fitness, lake, or golf club, and pay as you go. When you get bored with club membership, simply cancel at the time of renewal, and use your money for something else you need or enjoy.


2. Covenants, restrictions, bylaws, and “rules” limit your Constitutional, Civil, and property rights.

When you choose to own property in a common interest community, your home is not your castle. You’re just one of several or many homeowners sharing an investment, and the financial risks that go along with a fickle real estate market.

The HOA-industry will tell you that the rules exist to protect your property values, by prohibiting your neighbor from putting a rusty car up on blocks or painting their house in an ugly shade of pink.

These are minimal risks compared to the rights and freedoms you’re expected to give up, for the “good” of the association — everything from Free Speech to display of the American Flag.

For some more examples, see this list.

And if you think you can assert your rights in court, be prepared for a long, expensive legal battle.


3. You’re sure to confront incompatible personality types.

Even the HOA management industry acknowledges that “some personality types aren’t cut out for community association living.”

The folks who like HOAs, condos, and co-ops tend to fit one of the following categories:

  • Conventional personality types, who are comfortable following rules
  • People who fear “outsiders” and want all their homes and neighbors to fit a certain “neighborhood standard.”
  • Bossy types who enjoy telling others what they can and cannot do
  • Control freaks and busy bodies
  • Upwardly mobile prestige seekers
  • People who are willing to pay big bucks for someone else to take care of maintenance, so they don’t have to

On the other hand, if you’re the kind of person who values individuality, creativity, personal freedom, and maximum control over your budget and your property, then owning a home governed by a homeowners, condominium, or cooperative association surely isn’t the best choice for you.


4. You have minimal control over the community budget and rule-making decisions.

The HOA-industry won’t admit that living in HOA-ville of any kind is a lot like living with your parents or your boss. They’ll control the purse strings, but you’ll be expected to follow house rules and standard operating procedures.

If you question their authority, or try to do things differently, you’re bound to meet resistance.

Even worse, if you get on the wrong side of your HOA board, they can make your life miserable. You’ll be labeled a “troublemaker” or a “disruptive homeowner.” And you may be punished by selective rule enforcement and fines, or denied permission to update your property or accommodate your needs.


5. Beauty is only skin deep — don’t be fooled by staging and modern finishes.

When it comes to buying a home, new construction isn’t always better. Beware of shoddy and defective construction in new-build cookie-cutter homes and condos, as well as condominium conversions.

Condo and co-op apartment buildings are notorious for dangerous balconies, leaky roofs and windows, mold, and defective fire sprinkler systems.

And know that, as long as the developer and home builders control the HOA board, you’ll rarely get any satisfaction when you report defects to the people who built the community and sold you on wood floors, new stainless steel appliances, and video door bells.

Private roads, gated entries, and ponds with ornamental fountains look great when they’re new. But if your HOA doesn’t budget properly for costly maintenance, your community will start to look shabby within a decade.


6. Risk of special assessments.

Humans have a tendency to delay making expensive repairs as long as possible. And most HOA-governed communities don’t set aside money future renovation. So when the condo roof needs to be replaced, owners are likely to be hit with a special assessment.

And if your HOA board convinces a majority of your neighbors to spend big bucks on an elaborate overhaul of the community pool or the club house, you could be on the hook for thousands of dollars over and above your regular HOA fees.


7. More conflict than community.

When HOA fees increase substantially, it almost always divides the community between the Haves and the Have Nots or the Penny-Pinchers and the Big Spenders.

But you’ll also find conflict among the different types of owners in the Association. Owner-occupants, part-time residents, and investor-owners often live in the same community — sometimes under the same roof.

That fuels many battles over an owners’ rights to rent their property, both for the short-term or long-term.

But you’ll also find plenty of disagreements over noise, pets, parking, and smoking — especially in multifamily housing or densely packed detached home subdivisions.


8. You could lose your home and your investment.

As mentioned above, your HOA can foreclose on your home if you’re unable or unwilling to pay your HOA assessments or fees. And that becomes a big risk when you cannot afford a costly special assessment.

But condominium owners also face the threat of investors taking over their community association’s board, then voting to dissolve the condo association. Once that happens, investors force you to sell — often on their terms — so they can convert to rental apartments or homes, or bulldoze and redevelop the site.


9. Buyer beware!

When you buy a traditional single family home — with no HOA, you have the opportunity to obtain inspections of the property. That helps you discover potential hidden problems and alerts a buyer to the need for expensive repairs, so you can adjust your purchase price accordingly.

But when you buy a condo, co-op, or HOA-governed home, you don’t have the ability to inspect the common elements, common property, or amenities. Some state laws require basic  financial disclosures for the Association, but you’ll still be buying blind. You don’t know the true condition of commonly owned property, and that can lead to expensive surprises after you buy and move into the community.


10. Unregulated industry invites corruption and fraud.

Surprisingly, the HOA industry is virtually unregulated. Most states don’t handle complaints about an out-of-control or corrupt developer or homeowner-led HOA.

And the few states that do have regulatory agencies usually won’t investigate the most common complaints against HOAs — failure to maintain the common elements, failure to follow the governing documents, or engaging in conflicts of interests and thinly veiled kickback schemes.

Incredibly, most states don’t even license HOA managers.

Most Legislative efforts at HOA regulation are window-dressing at best, and few state laws have the teeth needed to enforce them.

With few checks and balances, corruption, embezzlement, and fraud are frighteningly common in HOAs, condominiums, and co-ops.



Bottom line: as a first-time home buyer, you’ll need to carefully consider your options, before your decide whether the risks and compromises outweigh any potential advantages to owning a condo or co-op, or any home governed by an HOA.♦




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