When you purchase a condominium, townhouse or other type of property in a planned development such as a leased land property, a gated community, or even an ordinary subdivision, you are obligated to join that community's homeowners' association (HOA) and 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 a few things about homeowners' associations and how they work before you buy.
HOA fees often range from $200 to $400 per month. The more upscale the building and the more amenities it has, the higher the homeowners' association fees are likely to be. In addition to monthly fees, if a major expense such as a new roof or a new elevator comes up and there aren't enough funds in the HOA's reserves to pay for it, the association may charge an extra assessment that can run into the thousands of dollars.
In addition to maintaining common areas, HOAs also set out certain rules that all residents must follow called covenants, conditions and restrictions (CC&Rs). In a common building, rules may include what color front door you may have, whether you are allowed to line dry your laundry outside, whether you can have a satellite dish, the size and type of pets permitted, and so on. In many ways, these rules are similar to the types of rules apartment dwellers must follow.
In a subdivision with individual homes, regulations may include what color you can paint your home, the exterior landscaping you can do, the types of vehicles you can park on the street or in your driveway, permissible type and height of fences, and restrictions on window coverings for windows facing the street.
No matter where you live, you are likely to be subject to city ordinances and restrictions related to the use of your property. HOAs add yet another layer of restrictions and because their members are more likely to know what you're up to, the HOA is more likely to enforce the rules.
While there are laws governing the behavior of HOAs, these associations can still have a powerful impact on your rights as a homeowner. Before buying a property in a community that has an HOA you should:
Learn the HOA's rules
You may be able to find an HOA's CC&Rs online as well as information about what happens if you violate a rule. 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. 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 CC&R 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.
Make sure the home you want to buy is not already out of compliance with HOA rules. Buying into an existing problem can be a headache, so find out what the rules are and whether you would have to make changes to the home to comply.
Find out about fees. Fees will potentially differ for each community you look in. Because of this you should make sure to ask the local HOA the following questions:
• How are HOA fee increases set?
• How often do increases occur, and by how much have they historically been raised?
• Can you get a printed history of HOA dues by year for the last 10 years?
• How large is the HOA's reserve fund?
• Also, ask for a record of special assessments that have been made in the past and ask if any special assessments are planned for the near future.
• Find out what the monthly dues cover. Will you still have to pay extra for garbage pickup? Is cable included?
Consider the impact of HOA fees on your short- and long-term finances
A condo with high HOA fees might end up costing you as much as the house you don't think you can afford.
Homeowners associations can be your best friend when they prevent your neighbor from painting her house Easter egg pink, but can also be your worst enemy when they expect you to perform expensive maintenance on your home that you don't think is necessary, or impose rules that you find too restrictive. Before you purchase a property subject to HOA rules and fees, make sure you know exactly what you are getting into.
When you purchase a condominium, townhouse or other type of property in a planned development such as a leased land property, a gated community, or even an ordinary subdivision, you are obligated to join that community's homeowners' association (HOA) and 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 a few things about homeowners' associations and how they work before you buy.
HOA fees often range from $200 to $400 per month. The more upscale the building and the more amenities it has, the higher the homeowners' association fees are likely to be. In addition to monthly fees, if a major expense such as a new roof or a new elevator comes up and there aren't enough funds in the HOA's reserves to pay for it, the association may charge an extra assessment that can run into the thousands of dollars.
In addition to maintaining common areas, HOAs also set out certain rules that all residents must follow called covenants, conditions and restrictions (CC&Rs). In a common building, rules may include what color front door you may have, whether you are allowed to line dry your laundry outside, whether you can have a satellite dish, the size and type of pets permitted, and so on. In many ways, these rules are similar to the types of rules apartment dwellers must follow.
In a subdivision with individual homes, regulations may include what color you can paint your home, the exterior landscaping you can do, the types of vehicles you can park on the street or in your driveway, permissible type and height of fences, and restrictions on window coverings for windows facing the street.
No matter where you live, you are likely to be subject to city ordinances and restrictions related to the use of your property. HOAs add yet another layer of restrictions and because their members are more likely to know what you're up to, the HOA is more likely to enforce the rules.
While there are laws governing the behavior of HOAs, these associations can still have a powerful impact on your rights as a homeowner. Before buying a property in a community that has an HOA you should:
Learn the HOA's rules
You may be able to find an HOA's CC&Rs online as well as information about what happens if you violate a rule. 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. 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 CC&R 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.
Make sure the home you want to buy is not already out of compliance with HOA rules. Buying into an existing problem can be a headache, so find out what the rules are and whether you would have to make changes to the home to comply.
Find out about fees. Fees will potentially differ for each community you look in. Because of this you should make sure to ask the local HOA the following questions:
• How are HOA fee increases set?
• How often do increases occur, and by how much have they historically been raised?
• Can you get a printed history of HOA dues by year for the last 10 years?
• How large is the HOA's reserve fund?
• Also, ask for a record of special assessments that have been made in the past and ask if any special assessments are planned for the near future.
• Find out what the monthly dues cover. Will you still have to pay extra for garbage pickup? Is cable included?
Consider the impact of HOA fees on your short- and long-term finances
A condo with high HOA fees might end up costing you as much as the house you don't think you can afford.
Homeowners associations can be your best friend when they prevent your neighbor from painting her house Easter egg pink, but can also be your worst enemy when they expect you to perform expensive maintenance on your home that you don't think is necessary, or impose rules that you find too restrictive. Before you purchase a property subject to HOA rules and fees, make sure you know exactly what you are getting into.