If you are in the buyer’s market for a home, you are in a great place! Home prices are lower in some areas than they’ve been in decades. That being said, you couldn’t have picked a better time to purchase a house.

In your house hunt, you may have found homes that claim to have an “HOA Fee” in the listing information. Everyone knows that means an extra monthly cost for you, but what exactly is the HOA? That question and more will be explained below to help you in your big decision of becoming a homeowner.

The HOA is the Home Owner’s Association. You can think of it as a club that includes all of the people who purchase a home in your same neighborhood.  You are charged a fee to be a member of this “club” and there may even be benefits to having your home be part of an HOA neighborhood.

The HOA will set standards for all of the homes under the HOA’s jurisdiction.  These standards or rules must be upheld by all home owners. In exchange for keeping the rules, your home can be protected from unnecessary value loss from negligent home owners.  What this means is that rules are created by the HOA in an attempt to keep home values consistent with market value.

An example of a rule you may encounter as a member of a neighborhood HOA could be vehicle regulation.  Most HOA’s will regulate how many vehicles can be parked at each home (and furthermore, the duration a vehicle can be stationary).  It may seem rigid to control something like cars on your property, when you are making payments for ownership of your home.

However, in this car example, regulation may protect you if you happen to have a neighbor that desires parking cars all over his/her front lawn.  In this case, the HOA rule will help set a standard that conforms a community and may keep home values from dipping.

Each HOA’s regulations will differ from another’s so it’s important to understand your prospective home’s HOA before you purchase your home and make it official by calling the movers.  So many home owners have resorted to filing a lawsuit with their HOA because of a regulation dispute.  Had the homeowner understood all the HOA rules before movers packed up all of their belongings and settled into the neighborhood, these lawsuits would never have been.

Our example on vehicle regulation above is typical, but some HOAs have completely different rules for their neighborhoods. Since an HOA board can decide on any number of rules they desire, home owners are pretty much at their mercy.  Some HOAs actually regulate if you can have pets on the premise or if visitors will have to check-in upon entering the neighborhood by showing ID—your movers could actually have to prove that you hired them before they could help you move in!

But some of these things could all be of benefit to you if you find the right neighborhood.  Like in these instances above, maybe you are looking for a neighborhood where all the lots only have 1 or 2 cars on them.  Or, maybe you want to live in a neighborhood without dogs on the street or barking.  Just make sure you research the terms and conditions of the HOA before you decide where to buy.