Home buyers have a lot of financial matters to think about. The purchase price and closing costs come to mind immediately. Yet the cost of buying a house is not the end of the budgetary burden. The cost of living in the new residence remains for the duration. These include property taxes, homeowner insurance -- flood insurance, if necessary -- mortgage payments etc. There are other items, too: the price of keeping the house maintained, functional and looking good. Where some owners take the hit themselves, others benefit from sharing the responsibility with a homeowner's association (HOA). Yet this benefit, also, involves a recurring expenditure.

What Does a Homeowner's Association Do?

A homeowner's association can serve a subdivision, a condominium or a planned community. Essentially, the HOA -- to some degree -- governs the use and management of the properties under its jurisdiction. This is done in the interest of maintaining a certain quality of life, a particular community appearance and orderly relations among residents. New residents become members of the HOA, and subject to paying dues. As members, they can be more or less active in association affairs. This is important since HOAs set the rules and regulations for the community.

In any given community, HOA rules can veer toward laissez fare or lean toward the very intrusive. Often they focus on what kind of improvements an owner may make to the property, e.g. landscaping, remodeling, exterior paint colors and the like. HOAs can also impose financial and legal penalties when the rules are violated. If there are common areas -- as with condominiums -- the HOA uses some of the funds from dues to maintain them for the benefit of all the residents. Despite the restrictions, many prefer a certain uniformity and order to the neighborhood environment.

What Do HOA Dues Pay For?

Homeowner's Association fees apply to various community expenses. Some HOA dues help to pay for those elements that are used by everyone. In a multi-unit condominium building, for example, residents might share elevators, a swimming pool and a lobby area. In addition, funds may be saved for emergency repair or regular maintenance projects. Even in single-family residence associations there may be tennis courts, health facilities and picnic areas to keep up. Beyond amenities, HOA levies might go to water and sewer service and garbage collection. The particulars are determined by the locale and the needs of the subdivision.

Do HOA Expenses Inhibit Buyers?

Most people know what they are getting into when they house-shop at a condo or planned community. As noted, many see advantages to regulation by a strong HOA. Problems arise when the dues are unreasonably high or the regulations -- also known as covenants -- are onerous. These could be rules put in place by the original developer and left untouched by subsequent HOA boards. Alternatively, harsh standards are imposed by HOAs whose leaders are given to overdoing it. The questions are: how high are the dues and are they worth the loss of freedom?

Mortgage lenders look warily at condos and other HOA residences when the association has a poor performance record. On another level, often the HOA fails to secure adequate insurance for its area of responsibility, exterior walls e.g. Home values are affected by poor HOA management. If the dues are too high, they can adversely influence the mortgagee's debt-to-income ratio by inflating the monthly payments. In the end, the HOA burdens, i.e. the dues and the rules, must be judged case-by-case. A well-managed community can support healthy home values and attract motivated buyers.