Ask three people how they feel about their homeowners’ association (HOA), and you’re likely to get three different answers. These organizations, which are funded by monthly are annual dues paid by the neighborhood’s homeowners, are tasked with enforcing the community’s covenants, conditions and restrictions (CC&Rs) and seeing to the general upkeep of common areas. On paper, it seems like a great concept; in practice, results often vary.

The Good

For residents in search of extra amenities and neighbors with neatly mown lawns, HOAs can be a major selling point. Having a ban on broken-down cars in driveways and fines in place for neglected landscaping encourages a peaceful existence and helps keep property values and curb appeal intact. HOAs are often charged with managing perks such as a clubhouse, pool, gym or park area as well. If you’re purchasing a condo, your assessments may include utilities and trash pickup.

Should residents run afoul of the CC&Rs, a graduated warning system is usually in place. The first violation may earn you a friendly letter, while failing to correct the issue is likely to result in exponential fines, all of which are significant deterrents.

The Bad

The flip side of HOA enforcement can range from inconvenient to downright nasty. You may have to get written permission, attend a board meeting or even petition your neighbors if you want to repaint your home, change your landscaping or even park on the street. HOAs often send teams out to do regular inspections and deliver notices of violations. While people may assume they’ll be exempt as long as they’re obeying the CC&Rs, constantly receiving mail detailing a stray weed or two or threatening fines for a garbage can that’s visible from the street can be stressful.

Fighting HOAs is usually a losing battle. The industry boasts an annual operating revenue of about $35 billion — that’s a lot of money at stake and plenty of power to go with it. There are instances where residents have waged legal battles against HOA errors only to lose their homes due to fee tallies that totaling tens of thousands of dollars, and the HOA can actually record a lien on your property or even force a foreclosure for unpaid dues.

Spotting the Ugly — Before It’s Too Late

So, how can you avoid the bad HOAs before you’ve settled into your new home? Here are a few tips:

  • Drive around and take a look at the common areas. Are they well kept? Is the pool clean? If you’re looking at a condo, are the building exteriors in good shape, or do you see cracked stucco and detached roof tiles?
  • Check court records to see if there are any current or past lawsuits against the HOA.
  • Ask to the see the reserve study. This is the document that details how the HOA plans to use the assessments it receives and how much it currently has saved to use for repairs and updates. Some 70 percent of HOAs are reportedly underfunded, and that could spell disaster for your future property values.

Questioning whether an HOA is right for you? It’s a deeply personal decision, and the answer may depend on the specific HOA as well as the community you’re considering. If you’re looking for the creative freedom to paint your house purple, you may be disappointed. But if you crave stability and less exposure to the nasty habits of shoddy neighbors, an HOA may help. Above all, make peace with your decision. For better or worse, your agreement with the HOA is legally binding.