How to Avoid Those 'Gotcha' HOA Scenarios

If you are looking to buy a home in an area that as community amenities, swimming pool, tennis courts, hiking trails, etc. you will be paying for them whether you use them or not. If you handle this area correctly, HOAs can preserve the value of your home. On the other hand, dealing with them can be a difficult task in itself. Here are six ways to avoid these pitfalls.

It all depends on the family, but love-hate relationships are common with their HOA. There can be benefits as well as negatives as well. Make sure you know how to make the HOA work for you, or else avoid buying into a neighborhood that has one.

Here are some possible “gotcha” moments you should consider when selling or buying a home with an HOA.

  1. 1.       An investor’s “gotcha”: Renting is against HOA rules

 Some neighborhoods limit the amount of homes that can be rented out, while they expect the houses to be used by families and kept up with. When you are dealing with an HOA neighborhood, make sure there are no restrictions on how many homes can be rentals.

If you do choose to buy a property in an HOA neighborhood, be sure to find out what covenants, conditions, and restrictions they have. If the HOA doesn’t allow rentals in the property you bought and intend to rent, you could be up the creek without a paddle.

 2.       The lender “gotcha”: The HOA has financial difficulties

If you are trying to sell your property, you should know if the HOA is solvent. It may not have enough cash reserves to cover common-area repairs and upkeep, and then the lender won’t approve of a new mortgage.

Know if there is an ongoing litigation, because if there is, getting a lender to approve a loan will be quite difficult. Also ask if they have adequate insurance. Most lenders won’t approve a loan unless the HOA has enough liability coverage for the common areas and community amenities. If your HOA doesn’t, go to the HOA and demand they upgrade their policy. If this affects one sale in the neighborhood, it will surely affect others.

  1. 3.       The architectural control committee (ACC) “gotcha”: We don’t approve

You just bought a very expensive property, not to mention all the money you dished out with a new paint job, landscaping, new roof, doors, windows, and all the sweat equity.

Now you forgot to submit your modification request form to your HOA. And now a snobby neighbor brings attention of all these renovations to your HOA. They will probably demand you undo your work, pay a fine, or even sue you.

Make sure you get the green light from your HOA before updating your property.

  1. 4.       The Board of Directors “gotcha”: Special assessments

Living in an HOA community, dues come around from time to time. These funds are the upkeep on the common areas. They also reserve parts of them for larger projects, like upgrading a parking lot.

If they have enough money to upgrade the parking lot, they will. But if there isn’t enough money for a big project, the HOA can charge you a “special” assessment fee. You can always budget for the biannual dues, but to have a rainy day fund for these special dues can really throw you off.

Before you buy, be sure to read the minutes from the last board meeting, and look at the HOA;s financial statements from the previous five years. You should also ask a board member if there will be a special assessment fee in the near future. Ask also whether the HOA uses part of the dues toward reserves. If not, brace yourself, because the dues are coming!

  1. 5.       Two amenities “gotchas”: You don’t even use the amenities – or they go under

You will pay for the swimming pool, hiking trail, or tennis courts, even if you never use them. This is all part of the wonderful HOA.

Maybe you picked this property because of the amenities. Now the HOA isn’t collecting enough to provide the proper upkeep. If more than 15% of the homeowners aren’t paying their dues, the pool will look more like an algae-infested eyesore.

If you do buy in an HOA, make sure you don’t mind paying for the things you won’t use, and definitely ask what percent of owners are not paying for them.  

  1. 6.       The deed restrictions “gotcha”: You can’t park that there

 If you have a boat or trailer, be sure to know a bit about the parking situation where you live. Some HOA neighborhoods don’t allow big burly machines in the driveway or street. On the other hand, if you drive a big truck, but the parking space won’t quit fit your truck, then you have a problem. Find out before hand the parking rules and restrictions before jumping in.


Attend the HOA meetings to get an idea of what goes on and the faces involved. HOA’s can be a pain, but they cal also serve their purpose if done correctly. Good luck!

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