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Why an HOA & Covenants are Value Enhancing (Don’t fight them) (And why you should pay your HOA fines)

HOA and Covenants value enhancing graphic

A recent article in the Wall Street Journal reported on a dispute between a new home owner and the Home Owners Association (HOA) in which the home owner disputed the authority of the HOA board while simultaneously admitting that he chose the particular home location because he “liked the look of the neighborhood”.  In other words, while he moved there because of the appearance, which was the result of strict enforcement of the recorded covenants, once he moved in, he wanted to ignore and violate those same rules.

This is not an unusual story.  Many buyers appreciate the benefits and the tangible value that covenants and an HOA board bestow, but they don’t want those rules enforced against themselves.  They want to do what they want, regardless of the negative impact on their neighbors.

Covenants and design guidelines are there to protect your home value and to make your home and your neighborhood more attractive to buyers than other choices.  Covenants are also there to protect your neighbor’s home value from the negative impacts of your decision making.  There are plenty of old neighborhoods that lack those protections that you can choose from, but if you choose a home with covenants, don’t make the mistake of thinking that you can ignore or blatantly violate the rules.  HOA boards are required to enforce the rules (even though many of them admittedly have too many nit-picky rules) because if they don’t, then all the covenants can be invalidated.  Courts too have enforced HOA rules on a regular basis, so long as the HOA sticks to the document’s meaning.

And if you are fined by your HOA, while you can cure the violation and attempt to negotiate away the fine in exchange for curing, HOA’s usually have the power to record a fine (lien) against your property title if the fine is left unpaid for a period of time. This results in your title being clouded by the lien until you sell or refinance, at which time you will be required to pay the fine and any interest.  And in the meantime, almost all lender loan documents are written to require a borrower to pay off any judgments or liens or risk having your loan declared in default.  Believe me, it’s really not worth risking your losing a half million loan or home over a small fine.


Read and obey the covenants.  Cure any default.  Pay the fine and keep your nose clean.  If you don’t want to abide by the recorded covenants, then don’t buy a home in that neighborhood!

Terrence R. Wall, Housing Developer

Former university lecturer and teacher of Real Estate Development

And creator of the first university level course in Sustainable Development

M.S. in Real Estate Appraisal and Investment Analysis from the

Graaskamp Real Estate Department, UW-Madison

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