Homeowners associations (HOAs) are organizations that enforce the rules for living in a neighborhood or community. When you buy a home in one of these communities, you join the HOA and agree to their terms as well as monthly fees and periodic assessments. You are, then, bonded to the association’s covenants, conditions, and restrictions (CC&Rs). The HOA also has legal powers, including imposing fines if you don’t follow the rules.
Here are four factors to consider before closing on a home in a neighborhood governed by a homeowners association.
1. Make sure you review the HOA’s covenants, conditions, and restrictions.
The CC&Rs dictate certain requirements for your home and property, such as:
Siding colors
Roof colors and materials
Fencing height, materials, and placement
Yard appearance and decorations
Visitor parking
Parking trailers or RVs
If you can’t find the CC&Rs online, ask your real estate agent for help or contact the HOA directly. Obtain an updated copy of the rules and ensure that you can comply with them before you continue with the buying process.
2. Know the fee structure.
Homeowners associations operate with fees from their members, which can sometimes be very high. The fees may even vary within a neighborhood based on a home’s square footage, orientation and location. Most multiple listing services (MLSs) include HOA fees in their listings, so you can easily gather this information during house hunting.
It’s also helpful to find out how fees have increased over time. You can ask for a history of HOA dues by year for the past decade. Note that fee increases are usually mapped out in advance based on estimated costs of utilities, labor, and maintenance. Although the fees generally increase over time, they may go down if new homes are added to your neighborhood and more homeowners can share in the fixed costs.
3. Determine what amenities are covered by the HOA.
Ask what the fees cover and think about how these amenities impact your finances. For instance, cable and internet services may be included, but you might have to pay for garbage pick-up. If you have a neighborhood park, pool, and/or tennis courts, inquire about the hours to see how they fit with your schedule. You’ll also want to ask about the rules for inviting guests to use these facilities. Note that you’ll pay for the “perks” of the community whether you use them or not.
4. Learn how the homeowners association operates.
When you buy a home in a managed neighborhood, you agree to the legal obligations and entitlements of the HOA. Inquire about the community meetings and voting process. Find out how the board communicates with members, including general notifications and fines. The more you know about the HOA, the more prepared for home ownership you’ll be!
You may also want to ask about the HOA’s financial management. Some associations keep a cash reserve on hand for ongoing maintenance and repairs, while others may use special assessments to cover unexpected expenses. Developments may also have multi-year financial plans that outline future assessments and expenditures.
During the home buying process, it’s always smart to work with your real estate agent to understand the rules and requirements of a homeowners association.
Let The Urban Dog Group help you with your real estate needs. Contact Christine Elias at caerealestate@gmail.com.
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