You can immediately tell when you walk into a neighborhood governed by a homeowner’s association thanks to the manicured lawns and trimmed hedges that compliment the perfectly matched houses.It’s a dream come true for any real estate investor or home buyer!
The story flips instantly, however, when you look at certain homeowner’s association issues with residents. Here, we’re sharing a few of these horror stories that were caused by details that might be negligible for any ordinary property owner, but not for some of these homeowner’s associations.
Homeowner’s Association Horror Stories
A Maryland homeowner’s association decided that all houses needed to have matching mailboxes! One homeowner had just bought a brand new mailbox and decided to fight the requirement. After a court battle, the homeowner was able to keep the mailbox but was still left with the hefty legal fees!
The problem with this regulation is not about updating the mailbox. It’s about having to come up with the $500 mailbox that the HOA approved and adding it to your property expenses!
See how any HOA fees will affect your potential investment property with this tool.
Wondering about other investment property expenses? Read this blog post to stay informed: 9 Rental Property Expenses Real Estate Investors Shouldn’t Forget.
Garage doors must be opened
A homeowner’s association in Sacramento required residents to leave their garage doors open from 8 am to 4 pm. This issue arose from the claim that people were illegally living in garages. Of course, the HOA received a lot of backlash for this issue and was forced to back down!
While this issue may not seem unreasonable for the HOA, they should have come up with a more reasonable solution, to begin with. However, residents who don’t comply with the garage opening requirement face a $200 fine!
Lemonade stands are not allowed
The lemonade stand issue that one homeowner’s association had is one too bad to believe. In a quiet Florida neighborhood, the local HOA filed a complaint on a kid’s lemonade stand! This is derived from the fact that the HOA did not allow businesses in the neighborhood, nor did it allow signs.
So, if you’re thinking of buying an investment property or buying a residence for yourself, look into every one of the set HOA regulations.
No pansies allowed
In North Carolina, a resident of an HOA neighborhood decided to plant some pansies in an empty patch of land in his subdivision. The result was him being legally fined $100 a day for the flowers! Of course, through the legal battle that arose from the pansies, the resident ended up enduring the legal costs of almost $20,000.
What makes this story an eye-opener for real estate investors and homebuyers is that even if your actions have a positive effect on the neighborhood’s curb appeal, it might not be what your local HOA is looking for.
Looking for other ways to improve your property’s curb appeal? Read this blog post: Forced Appreciation: 11 Genius Ideas to Improve the Curb Appeal of Your Property.
Parking a truck in the driveway
After a Florida resident was given permission to park his truck in the driveway before moving in, the HOA decided that all vehicles must be parked in garages. However, having given the resident permission to park it prior to moving, the man won a legal battle and the homeowner’s association was left with the legal fees which exceeded $187,000.
Clotheslines are prohibited
You must have heard this one before! Residents are not allowed to air-dry their clothes the old-fashioned way! An Oregon HOA decided it was an eyesore when one woman put up a clothesline in her backyard. The end result was forcing her to air-dry laundry in her garage!
The color of the shutters
We all enjoy the site of freshly painted shutters on a house’s exterior. On the other hand, a North Carolina woman didn’t get to enjoy her new shutters after the homeowner’s association deemed her color choice unacceptable! The end of the story is that residents of the area grouped together and replaced the HOA with one that approved her shutters’ colors.
This affects real estate investors and property buyers in any real estate market. When buying properties for fix-and-flips or to rent out, you must check the local HOA’s regulations to make sure the end product fits with them. In any case, if something doesn’t fit the standards, you might end up paying more to fix it or suffer the hefty fines.
No eco-friendly yards
A California homeowner decided to rip out her lawn and replace it with an eco-friendlier choice of drought resistance plants in an effort to do the responsible thing. The homeowner’s association decided it was too ugly and required her to add some more lawn area into her front yard. This actually resulted in the State of California passing a law to protect homeowners from being fined for installing eco-friendly landscapes.
Read this blog post to learn more about eco-friendly investment properties: Investment in Green Properties Can Pay Off in the Long Term.
After a hurricane hit a homeowner’s association area, one homeowner received a $400 fine for having tree limbs and debris one day after the hurricane! To top that, they also fined another resident for having no roof!
In a Nashville, Tennessee neighborhood, residents decided to remove blinds from their house and install curtains in an effort to ensure children safety. Note that a resident’s child was tangled in the blinds’ cords and nearly died. The homeowner’s association did not approve, and the resident chose to move into a non-HOA neighborhood.
Are cities and local governments doing anything about homeowner’s associations?
Some of these issues with homeowner’s associations are not getting any better. Real estate investors and property owners are getting harassed into complying with their codes. Keep in mind that this type of association is an $85 billion business! This is all derived from fees filed to the residents or real estate property owners.
Many agree that the HOA concept seems to be working well in keeping neighborhoods and real estate markets in tip-top shape. According to a survey from the residents living in HOA regulated areas, 87% of residents rated their experience as positive. 84% believed that the elected representatives were serving the community’s best interests.
Keep in mind that the majority of residents were not aware of the fact that the HOA has the right to foreclose on their properties. That is if they were defaulting with fees or dues.
The feeling that something needs to be done to regulate it and protect real estate owner’s rights is growing. In an effort to make disclosure at the time of purchase mandatory, many are pushing for a federal law. The law will enforce mandatory education and disclosure of fees, requirements, and authority that’s given to the homeowner’s association in the area.
The Bottom Line
Buying an investment property while knowing the effect of the homeowner’s association on your overall experience can definitely make you think twice before buying any said property. It’s important for real estate investors to factor HOA fees in their investment property calculations and preparations. Keep in mind that it’s becoming almost impossible to buy an investment property that’s not regulated by HOAs.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
We’ve listed some horror stories on HOAs, but we know a lot of good can come from them too. So, what are some of your positive experiences with homeowner’s associations?