Here’s everything you need to know about buying and living in a home in a homeowner’s association.
If you’re in the market for a new home, you may have heard about homeowners associations, or HOAs. Don’t get caught off guard by likely extra fees and rules you’ll have to follow.
What is a Homeowner’s Association?
A Homeowners Association (HOA) is an organization usually established by the original developers of certain subdivisions, planned communities or condominium buildings. The group establishes bylaws, rules, and regulations to help make a clean and cohesive atmosphere in the development.
When future homeowners buy homes or property in the established development, they become members of the association and are required to pay dues and abide by the rules and regulations of the association.
Who Makes Up an HOA and What Do They Do?
An HOA is made up of resident homeowners in the planned community who elect a board of directors. The board helps maintain and enforce the covenants, rules and regulations of the association. The directors help determine the HOA fees and schedule of when the fees should be paid according to the association’s annual budget.
Does it Cost Money to be a Member?
Don’t like to keep your gas cut? Your HOA might have a problem with that.
Most HOA’s require homeowners to pay monthly or yearly dues to own a home in the planned development. These fees may vary in amount from one HOA to another according to the amenities offered, the common areas shared by the community and the maintenance costs to keep the neighborhood a desirable and a quality place to live.
As a member of an HOA, a homeowner is responsible for paying dues and abiding by the Covenants, Citations and Restrictions (CC&R’s) in the community, which may include specifications regarding home improvements such as acceptable paint color, landscaping, rules that apply to the exterior aesthetics or any other terms regarding the homeowner and property. The CRR’s are set to help make the community an aesthetically maintained and cohesive place to live but they also can contribute to increased property values.
Can the Association Fine Me if CC&R’s Aren’t Met?
If a homeowner does not comply with the CC&R’s, a fine or citation may be given and could go to mediation to try to resolve the issue. Legal action can be taken if necessary but since the homeowner must live and have some type of relationship with the HOA and other homeowners, most disputes can be handled in a civil manner.
What Do HOA Dues or Fees Pay For?
HOA fees are used to help maintain the properties, amenities and common areas within the association. Dues can include
maintenance costs for lawn care, landscaping, snow removal, road maintenance, community buildings, pools, gates or other structures shared and used by the homeowners.
Community swimming pools are a nice bonus you might get with HOA fees.
Fees may also go towards:
- Master insurance for common use buildings and structures
- Utilities, cable, internet, water and sewage costs for the common use buildings and/or as an added offering to the residents.
- Reserve funds used for major repairs or unexpected costs
- Any maintenance staff or security guards
- For condominiums – costs for maintaining the building lobbies, elevators, swimming pools, and parking spaces.
Can HOA’s raise their fee?
HOA dues are based on the association’s annual budget. In order to meet the annual budget, an HOA can increase the costs of dues, but the increase must be approved by the board of directors. In some instances, the HOA may ask for a special assessment to help build the reserve fund in order to meet the unexpected or more costly repairs.
Questions Future Home Buyers Should Ask Before Buying in an HOA
Before buying a home in a neighborhood in an HOA, homebuyers should always ask questions and familiarize themselves with the expectations of the HOA to make sure it is something that they want to be a part of.
Some questions that home buyers should ask before purchase include:
- What are dues? Don’t be afraid to see what those HOA fees are going towards!
- Ask to see the annual budget, documentation on reserve funds, and if there are any known or proposed special assessments planned.
- Ask to see a copy of the Covenants, Regulations, and Restrictions
- What are the guidelines or restrictions for building a house? (ie: size, architectural style, color, setbacks etc.)
- Are there home improvement guidelines and regulations?
- Are there parking rules and regulations? (For instance, can you park an RV in the driveway or yard?)
- Are short-term rentals allowed?
- What are the landscaping and/or holiday decoration restrictions?
- Are there noise compliant policies
- Are there home maintenance standards?
When buying a home, homebuyers should always ask for information about the HOA to make sure the planned community or neighborhood will be a good fit for them. The monthly or yearly fee may play a role in the financial decision of purchasing a house in a subdivision with a Homeowners Association. However, the Covenants, Rules, and Regulations are just as important in that decision-making process.
Navigate HOAs with a Real Estate Professional
Navigating the world of HOAs requires the expert advice of a real estate professional. The trade-offs and benefits of a well-maintained neighborhood might have the amenities unavailable in communities without a home owner’s association.
While you might not have as much wiggle room for decorating your yard and added monthly expenses, a Realtor can help you determine if that’s right for you.