Not all homeowners association rules are good for property owners.

Having a homeowner’s association (HOA) for your neighborhood or condo building brings some advantages, such as regular community maintenance and improvement. However, HOA rules can also be extremely restrictive, and while some are optional to join, others are required if you want to purchase property in the area. Moreover, HOA dues can add a lot to your monthly budget.

Before you buy into an HOA, request and carefully read documents such as the association’s budget and its Covenants, Conditions & Restrictions (CC&R), which set out the rules for property owners and members—and when you do, consider whether they are asking too much of you. Here are seven red flags to watch for.

It has a limited budget or minimal funds in reserve

Your HOA should have both an operating fund, which pays for day-to-day expenses such as maintenance of common areas, security, and property management, as well as a reserve fund for long-term projects (building a new playground) and repairs (fixing a broken elevator or replacing fitness equipment at the gym). HOAs should maintain a 70% reserve—otherwise, you’re more likely to see dues increase or pay a special assessment to cover costs.

Note that these funds include the membership fees you and other property owners pay, so you should know (and care) how your dollars are being spent.

It has the right of first refusal on property sales

Historically, some HOAs have had a “right of first refusal” clause, which requires you to offer your home to the association before you put it up for public sale. These clauses are generally discriminatory and likely unenforceable legally, but seeing this in your contract could indicate your HOA has more problematic rules or poor management.

Its bylaws are difficult to amend

If your HOA makes it nearly impossible to amend its rules—requiring a significant percentage of members to participate or allowing dissolution votes at intervals of 10 years or more—you’re dealing with an organization that is unlikely to see much change or adapt with the world around it.

That said, sometimes requiring a high threshold of homeowner approval can be an advantage, as it prevents the board from amending bylaws unilaterally.

It has strict maintenance requirements

It’s probably not unreasonable for your HOA to request regular yard maintenance such as mowing, but demanding detailed upkeep on strict schedules is likely to feel suffocating.

It limits certain property modifications

Some HOA rules prevent homeowners from adding a backyard deck, installing solar panels, building fences, etc.—and anything more than a minor change usually requires you to submit a plan for HOA approval. The HOA may also have strict rules about color, materials, style, and height for any renovation projects as well as landscaping changes with the goal of keeping a homogenous aesthetic across the neighborhood.

If any of the restricted modifications are important to you, consider whether the HOA is the best option for you.

Its policies on pets and parking are overly restrictive

Your HOA may have breed and size restrictions for pets (similar to landlords’ rules for renters) or prohibit backyard chickens or beehives, so check if you have animals you’re bringing with you or are dreaming of urban farming.

You could also be limited in how many cars you can have in your driveway or on the street in front of your home, as well as what kind and for how long, so if you have more than a couple of vehicles, you could run into parking violations. Some HOAs also have rules about keeping garage doors closed or parking commercial vehicles or moving pods on the street.

Its leadership is bad at communicating

Pay attention to how the HOA board communicates in the initial stages of the property-buying process. If they’re not willing to provide documentation, are disorganized or unresponsive, or seem to avoid transparency, that’s probably what you can expect as a member in the long term. You can also ask current homeowners about their experience.

Article source: LifeHacker