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5 Things Buyers Need to Know About Homeowner Associations

filed under: For Buyers posted on August 7th, 2015

Real Estate

The 5 things buyers need to know about Homeowner Associations (HOA).  Many communities built since the early 1980’s have a HOA with rules and regulations governing the not only the “look” of the community as well as listing all the do’s and don’ts for residents.  Many buyers assume that only condominium communities have HOA’s and ignore their opportunity during the contract phase allowing review the documents covering their future neighborhood.  Most HOA’s regulate the height of fences, restrict above ground pools, don’t allow storage sheds and won’t allow residents to park motor homes and/or boats on property for more than a 1 or 2 days.

Typically the purchase contract spells out the number of days buyers have to review and accept the HOA documents.  Unfortunately some buyers don’t read and digest the information and after closing find themselves in trouble when they install the wrong type of fencing or try to build a storage shed in the backyard.

5 things buyers need to know about Homeowner Associations:
(Note:  there will alway be exceptions to everything listed below)

  1. Membership is mandatory.  HOA’s are not optional and membership normally requires annual or monthly dues. Failure to pay in a timely manner has penalties.
  2. Somewhere buried in all the legal jargon you’ll find the specific details covering what owners can and cannot do.  Condo associations usually cover exterior colors, size and number of pets and restriction on number of cars.  Single family communities usually don’t restrict the number of pets (local zoning may restrict) but they often dictate size, type, height and color of fencing, restriction on above ground pools and storage sheds, play/gym sets as well as not allowing motor homes, RV’s, boats or large campers to be parked anywhere on the property.  Not reading and understanding the fine print causes the most problems for the new homeowners after they close.  Many newer communities spell out landscaping, exterior color and minimum square footage requirements.
  3. Most HOA’s have the ability to establish yearly (or monthly) dues requirements.  They also have the authority to fine or penalize owners who do not abide by the rules.  Some HOA’s are very strict and want everly “i” dotted or owners are penalized.  One thing to remember about HOA fees -if and when you sell your home or condo the lender requires a “clear letter” from the HOA or management company.  The clear letter states that you (the seller) are up to date with all fees- so if you have skipped paying dues or fines along the way- it will catch up to you.
  4. Disadvantages of HOA’s.  While there are horror stories about over zealous association boards and poor management companies-the problems usually surface when owners have been lazy about attending meetings and getting involved.  The same people sitting on the HOA board for years- because nobody can be bothered to volunteer their time- often ends with problems.  Also turning the day-to-day management of the community over to a “management company” and not overseeing expenses, long-term planning and handling of everyday issues often leads problems.  In short-HOA’s need active participation from all the owners.
  5. Advantages of HOA’s.  A well run/managed HOA which enforces the rules, manages finances and plans for the future can be a huge asset to a neighborhood or complex as it ages.  Committees, formed through the HOA, can enhance social, landscaping, neighborhood welcomes and other activities geared toward the communtiy. However committees need owner participation and the best way to learn about your new neighborhood or complex is to attend meetings and get involved.

Buyer beware is good advice when it comes to HOA guidelines.  So take the time to review the documents and if you have questions -consult an attorney.  If you are looking for an exception – for example your dog is 5lbs heavier than condo complex allows- get it in writing from the HOA in a timely manner within the purchase contract guidelines.

Extra reading on HOA’s:
Bankrate.com,  Real-estate.Lawyers.com,  Houselogic.com

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