Never lived in a community governed by an HOA association? No need to worry, IKO Community Management has tips for moving into an HOA community!
What You Need To Know
While there are laws governing the behavior of HOAs, these associations can still have a powerful impact on your rights as a homeowner. While considering buying a property in a community that has an HOA you should:
- Learn the HOA’s rulesYou 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.
- Make sure the home you want to buy is not already out of compliance with HOA rulesBuying 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.
- Assess environmental practicesIf environmentally-friendly living is important to you, be aware that some HOAs may dictate that you use fertilizers, pesticides, sprinkler systems, and whatever it takes to keep your lawn picture-perfect. They may not allow xeriscaping (an environmentally friendly form of landscaping) and may limit the size of gardens, ban compost piles and prevent you from installing solar panels. If these things are important to you, make sure you check the fine print first.
- Find out about fees. Fees will differ for each community. Because of this you should make sure to ask your 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. Note that economies of scale can mean that special assessments are higher in smaller HOAs.
- Find out what the monthly dues cover. Will you still have to pay extra for garbage pickup? Is cable included?Compare dues for the complex or neighborhood you are considering to the average dues in the area. Keep in mind that you will have to pay for recreational facilities whether you use them or not. Find out the hours for amenities like pools and tennis courts. Will you be around during those hours, or will you be paying for facilities you’ll never be able to use? Be aware that the HOA may have rules about how many guests can use common facilities.
- Find out what kind of catastrophe insurance the HOA has on the buildingThis is particularly important if you’re considering a condo or townhouse purchase and you live in an area that is prone to floods, earthquakes, blizzards, fires, tornadoes, hurricanes, or any other type of potential natural disaster – and that is virtually anywhere.
- Consider the impact of HOA fees on your short- and long-term financesA condo with high HOA fees might end up costing you as much as the house you don’t think you can afford. Or the shared costs of HOA amenities may in the long-term save you annual memberships to a pool, club or gym. Each situation is different for each community and individual.