You’ve found the perfect home! The price is right, the style is right, and you love the location. But there’s one catch—that perfect neighborhood and home is in a community with a Homeowners’ Association (HOA). Before you put in an offer on your dream home, it’s important to know what living in an HOA is like. If you’re a little unsure about what you’re getting into with an HOA and whether or not it’s right for you, here’s what you need to know.
What are HOAs?
HOAs are the governing board for a planned community. These communities can include condos, townhomes, gated communities, and single-family homes with common areas. Their purpose is to make sure that the building or common areas are maintained, Conditions, Covenants and Restrictions (CC&Rs) are followed, and the entire community has a cohesive, well-kept environment that keeps property values high. A lot of these rules have to do with exterior home colors, additions, satellites, and so on. In townhomes or condos, rules may be geared toward parking and what kind of pets are allowed.
The governing board of an HOA comprises a group of members that belong to the HOA and are elected by other HOA members. Election rules and procedures are outlined in the HOAs bylaws. When you move into a development, you usually automatically become a member of the HOA. Board officers are elected and have different responsibilities and terms. The responsibilities of the board are to create an annual budget, collect dues, and enforce rules. Some boards choose to hire a professional management company to handle these responsibilities. If you enjoy being involved, serving on the HOA board in your community may be something to consider!
HOA boards usually hold annual meetings as well as quarterly or monthly meetings that are open to all HOA members.
During the annual meeting, elections are held, a new budget is presented and received, and any other items that need addressed are reviewed.
During monthly or quarterly meetings, there will usually be an open forum. This is a chance for any member of the HOA to speak to the board and other members, as well as bring up issues that need to be resolved. In a perfect world, this is not supposed to be a time to complain but to bring up issues and resolve them.
HOAs Have Fees
Every HOA charges fees. It’s important to know how much the fees are and how often they need to be paid. Some other important things to ask about fees:
- Will unpaid fees lead to a lien or foreclosure on my home?
- Can my fees increase? Most likely the answer to this one is yes. You can ask for a schedule of fee increases over the last few years to see what to expect.
- Is there a reserve fund? A reserve fund pays for major issues and repairs like a leaky roof (if you own a condo or shared building), pool issues, or other improvements that need to be made.
- If the reserve fund is empty, will I be responsible for excess cost of the problem, and how much can I be held responsible for? This is important because depending on the issue, fees can go into the thousands.
- Are there any existing issues with the home I want to purchase that will have to be resolved with extra fees or construction? Make sure you’re not buying a home that has baggage (or that you’re willing to pay for that baggage).
What You’re Paying For
If the HOA fees seem reasonable and you feel that they will work for you long-term, take a look at what you’re paying for.
- Common Areas: What common areas are available in the community, and are they worth the cost? Community pools, tennis courts, and family parks are all maintained by HOAs. Sidewalks, greenbelts, and other landscaping are managed by the HOA and add to the value of your property. If these amenities aren’t that important to you, an HOA may not be for you.
- Upkeep and Maintenance: If you’re buying a home because you like the upkeep and value of an HOA, take a drive around the entire community first. If you notice dead grass, roofs in disrepair, or rusty clunkers on the street, the HOA is probably poorly managed and you may be paying a fee for nothing at all.
Know Your Personality
Before you sign the contract to buy your home in an HOA community, you need to ask yourself, “Can I follow the rules?” If the answer is no, you may need to re-think your decision. There are rules and you have to follow them. That’s the nature of an HOA. Otherwise, consequences will come, usually in the form of hefty fines. If you know that you don’t like staying within bounds, or that the home you are thinking of buying will not work for you without major modifications, then an HOA community may not be for you— and that’s OK!
If you’re not following the rules, you may get a written notice on your door or in the mail. Or, if a homeowner has a problem with the HOA and there is conflict, the HOA has a way to resolve these issues. This process should be outlined in the HOAs bylaws. Usually, the person with the complaint needs to put it in writing, all parties involved are notified, and a meeting is called specifically to resolve the issue.
The goal is to have the issue discussed and resolved in the meeting. The resolution is put in writing and both parties agree to follow the terms set out. If things just cannot be resolved in the meeting, then an unbiased third party is called in to settle the conflict. Many HOAs hire attorneys to help with conflict resolution, so it may not be a bad idea to have one on your side if the issue is serious.
Is an HOA right for you?
The key to finding out if living in an HOA is right for you is knowing your own personality and determining what’s important to you. If you like order, upkeep, amenities, and everyone following the rules, then living in an HOA will probably be an enjoyable experience for you. That is, as long as the fees are in your budget and are being well managed by the association. On the other hand, if you want a little more freedom in paint choices and where you want to park your car, you may not want to settle in a community with an HOA.
Whatever your personality, purchasing a home is a big step (and a great step)! Be sure to do your research to make your home-buying experience an enjoyable one and that your new home will be a place you’ll want to live in for years to come.