HOAs: Everything You Wanted to Know
You either love it or you hate it. Homeowners Associations are one of those things that come with some neighborhoods. We know we have to pay for them and it would seem like just another fee lined up with landing your dream home. Well, we are here to clear the air so you know EXACTLY what these associations are all about! Below are some common facts and questions that most have when the HOA comes to surface in the home buying process.
What is a HOA?
A HOA or Homeowner Association is a legal entity created to manage and maintain the common areas of a community. Typically these “common areas” consist of things like pools, clubhouses, landscaping, parks, streets and roads. Basically, it is to maintain a certain standard within the community.
HOAs can consist of single family homes, condominiums, or town homes and are typically setup by the original developer of the community with a set of rules called “Declaration of Covenants, Conditions, and Restrictions” otherwise known as “CC&Rs”. There are also Bylaws and general HOA rules and regulations.
One of the primary functions of the HOA is enforce and ensure that these “CC&Rs” are adhered to by the individual homeowners. The guiding principals of these regulations are normally to help maintain property values and the quality of life within the community. The CC&Rs state the restrictions in the Association, explain what the homeowners association is responsible for and what the homeowner is responsible for. The Bylaws dictate how the HOA operates as an organization.
What are the Typical Attributes of a HOA?
HOAs are normally non-profit corporations with a set of bylaws and the authority to enforce those bylaws, including things like architectural and design standards.
Membership is usually mandatory for all property owners.
Mandatory monthly dues are normal and periodic special assessments are not uncommon.
Monthly fees can vary from less than $50 to hundreds of dollars per month depending on the neighborhood.
There is usually an elected board of directors who normally consist of volunteer homeowners.
Many HOAs hire a property management company (usually picked by the board of directors) to do things like maintenance, bookkeeping, and dues collection.
Many Home Owner Associations have an HOA Website to communicate effectively with their members.
Where Does My Money Go?
This is one of the most popular questions. People like to know where their investment is being used, otherwise you feel you are throwing away your hard-earned funds. Below are typical practices of a HOA and what your money would go towards.
Pay for fire and hazard insurance
Enforce the deed restrictions or CC&Rs for things like: exterior home improvements, general exterior condition of property such as paint, how properties can be used, and even noise control.
Maintain landscaping in the common areas.
Provide snow removal.
Maintain recreation facilities such as clubhouses and pools.
Provide security services.
Organizing regular activities and meetings for residents.
Pay for garbage
If I Buy a Home Within a HOA, Do I Have to Belong to it?
Yes, the only way an HOA can work correctly is if everyone who lives within its boundaries belongs to the HOA and pays the dues required.
What is the Difference Between the HOA and the Board of Directors?
The actual HOA consists of everyone in that specific neighborhood (the geographic boundary). Each and every owner is a member of the HOA and must pay the membership. The Board of Directors consists of those owners who have been elected to conduct the day-to-day business of the HOA and make the decisions that affect all owners.
What Should I Know About the HOA Before Making an Offer On A Home?
You should know exactly what the HOA you could potentially get yourself involved in all about. In order to find out the most about your potential HOA, you can request a copy of CC&Rs and the HOA rules and regulations. For example, if you are big on gardening or landscaping, you will want to know about the rules for or against yard manipulation in the neighborhood before making an offer on your home. Other things to think about include these questions:
Can I attend a board meeting? (Seeing the items on the agenda will go you a sense of how the HOA is run, the people living there, and the sense of community)
Do people seem to like living in the association? (Take walk or drive at different times of the day, and get a sense of who lives there. Even ask people about the community since you will be working with them essentially)
Is the Association well-funded? (You can ask your real estate agent to provide you with a set of current financials and the reserve study to try to understand where the HOA is financially should you desire this information. For example, a good question to ask would be “Is there going to be money for the roof in 10 years or will the HOA be asking me for money in the form of a special assessment?”.
All in all, it is essentially your responsibility to stay informed about the HOA so you know what questions to ask. Your real estate agent should also know how to answer your questions or atleast know where you can find them. Being happy in your new home includes being happy in your community, and the HOA is a huge part of how that community operates. Stay informed and you will stay happy for years to come!
The post HOA: Everything You Wanted to Know appeared first on If it has to sell - Call Chantel!.