What Buyers Need to Know About HOAs
An HOA or Homeowners Association is a group of homeowners from the same development, neighborhood or complex that share a set of rules, costs and benefits (amenities). The officers and members of the HOA make decisions, collect dues and pay for goods and services on behalf of the community.
- Some of the items governed or managed by the HOA include:
- Parking lot maintenance
- Amenities, such as the pool, hot tub, tennis courts and maintenance of those amenities
- Groundskeeping and landscaping for the property
- Water and electricity in common areas such as lobbies, clubhouse, fitness facilities, courtyards and walkways
- Decisions about the appearance and use of the property called Covenants, Conditions and Restrictions or CC&Rs
Another important thing to know about HOAs is that they make the rules (CC&Rs) for your community. The CC&Rs indicate what colors you can paint your home, what kinds of pets you can have and how many, parking enforcement, noise limits, smoking on property, what kind of changes you can make to your unit or home, if you are allowed to rent out your home to someone else and if you can use your home for any business activities. The CC&Rs apply to every homeowner in the community.
What You Need to Know About HOA Dues
HOA dues are typically paid monthly and if not paid, can cause a major headache for you as the homeowner. Here’s what you need to know about HOA dues.
- They go up. As the costs of goods and services used by the HOA to maintain the property goes up, so to do the dues.
- Dues cover things you personally might not use. You might not use the fitness facilities but your dues help maintain those facilities.
- They can affect your credit. If you don’t pay or pay late, the HOA can report your payment history to the credit bureaus.
- If you don’t pay dues long enough, the HOA puts a lien on your property that can prevent you from selling the home and also impact your credit. An unresolved lien can be used to foreclose on your home in some cases as well.
- You still need insurance. While the HOA typically insures the outside of the structure and the community property, their insurance does not cover anything inside your unit or home. You still need homeowners insurance to protect yourself and your belongings.
- HOA dues don’t cover everything. When a major repair or cost comes up and there isn’t enough to cover it in the HOA’s reserve fund, they can set up a special assessment. A special assessment is an extra fee you will have to pay the HOA to help cover the cost or repair required.
Before you buy a home with an HOA, make sure you review a copy of the by-laws and the CC&Rs to make sure you can live with the rules outlined by the HOA. Your Century 21 Broadhurst agent can help you review this information and discuss if the rules are reasonable or if you might be better off considering a home in a different community.