The 4 most important things buyers need to know about  HOA’s (Homeowner Associations).

“Not Invited”

Lots of communities built since the early 1980s are governed by HOA rules and regulations controlling not only the “look” of the community as well as posting all the dos and don’ts for residents. Many home buyers assume that only condominium communities have HOA’s and ignore their opportunity during the contract phase allowing review of the documents.

I have often told buyers most HOA’s don’t allow goats, chickens, and other farmyard creatures.  So if you are planning on your own hen house- be very careful where your buy a home.

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 the property for more than 1 or 2 days.  Some HOA’s also restrict exterior colors and have control over outside design.

So while having an HOA may be a good thing -not taking time to review all the documents during the contract period is a dumb thing.

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.

4 things buyers need to know about Homeowner Associations:
(Note:  there will always 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 the number of pets, and restrictions on the number of cars.  Communities of single-family homes usually don’t restrict the number of pets (local zoning may restrict) but often specify the size, type, height, and color of fencing; have a ban 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 every “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 overzealous association boards and poor management companies-the problems usually surface when owners have been lazy about attending meetings and/or not getting involved.  The same people sitting on the HOA board for years- because nobody can be bothered to volunteer their time- often end 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 lead to problems.  In short-HOA’s need active participation from all the owners.And the 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 community. However, committees need the owners to participate 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.

Your agent cannot explain the details for the documents to you so take the time to review the documents and if you have questions -consult an attorney.

If you are looking for an exemption – for example, your dog is 5 lbs heavier than the condo complex allows or you need handrails installed on the front porch make sure to get in writing from the HOA.  Protect your investment and don’t accept verbal agreements from anybody.

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