Homeowners Associations: An Overview
When you purchase a property that is part of a planned development, such as a condominium or townhouse you are obligated to join that community’s homeowners’ association (HOA). By joining an HOA you are agreeing to pay monthly or annual HOA fees for the upkeep of common areas and the building. If you are considering purchasing one of these types of properties, you should be aware of the following things about homeowners’ associations and how they work before you buy.
Consider Your Personality
Are you the type of person that detests being told what to do? If so, you might want to think about how living in a community with an HOA will impact your temperament. It may be a very frustrating experience for you. One of the major benefits of homeownership is the ability to customize and alter the property to suit your needs, but HOA rules can definitely interfere with this.
Research and Compare the Fees
Compare dues for the complex or neighborhood you are considering to the other HOA fees in the area. Remember that you will have to pay for recreational facilities whether you use them or not. So, if the hours for amenities like pools and tennis courts do not work with your work schedule you will end up paying every month for these amenities that you will not be able to actually use. The HOA may have rules about how many guests can use common facilities.
Think About These Questions
1. How are HOA fee increases set?
2. How often do increases occur, and by how much have they historically been raised?
3. Can you get a printed history of HOA dues by year for the last 10 years?
4. How large is the HOA’s reserve fund?
5. Is garbage pickup covered?
Learn About the HOA Rules
You may be able to find an HOA’s rules and guidelines online as well as information about what happens if you violate them. Make sure any online information is current. If you cannot find this information online, ask your real estate agent to acquire these documents for you or contact the HOA yourself. Make sure that you pay particular attention to rules regarding fines and whether the HOA can foreclose on your property for nonpayment of HOA dues or fines resulting from violations. Also, learn about the process for changing or adding rules, and whether HOA meetings are held at a time you will be able to attend if you wish to do so. If the rules are too restrictive, consider buying elsewhere.
How will HOA Fees Impact Your Finances?
The reality is that a lot of the time being able to purchase a home that is part of an HOA, it comes with a cheaper purchase price. That said, many people when considering purchasing a home because of this, forget that unlike purchasing a freehold property, there is an additionally monthly fee – which can range anywhere from a couple hundred dollars to a few thousand depending on the location that they are hoping to buy.