There are at least four things you should know about HOA’s before buying the home of your dreams. Understanding the ins and outs of living life within a homeowner’s association will help you make an educated home buying decision. Is life in a planned development a good option for you? And, if so, which ones have HOAs that may suit you best? The answers to those questions depend not only your finances but your enthusiasm for shared amenities, tolerance for rules and regulations, and comfort with self-government since most HOAs are overseen by volunteers who live in the development.
What Affects Rates
The number and size of the development’s amenities is one factor affecting rates. For example, a development that’s guarded by a gate, and has a clubhouse and golf course is more likely to levy higher fees than one that offers minimal security and only a modest common area.
Fees can differ even within a development, due to variations in square footage, location, and orientation, all of which can affect how much upkeep the property will require.
Finding out how often fees have increased over time and by how much is worth your due diligence. HOA increases are customarily mapped out three to five years in advance, using estimates of the future costs of utilities, labor, maintenance, and more.
What Your HOA Membership Includes
When you buy a home in a managed community, you’re actually buying a bundle of legal obligations and entitlements in addition to physical living space. The precise rights, services, and amenities for which the HOA is responsible may range as widely as the fees being charged.
Look at what is included (and not included) that will affect your household finances. Will you have to pay for garbage pickup, for example? Are utilities included? Which ones? What about cable and/or internet service?
Keep in mind you’ll pay for perks, such as recreational facilities, whether you use them or not. Find out the hours for amenities, such as pools and tennis courts, to determine if they’ll work with your schedule. If you’d think you’ll want to share these facilities with friends or family, check the rules and fees that pertain to guest use.
Compliance with the HOA
Find out if the home you are interested has any lingering issues with their HOA. Failure to ask about these problems in a timely way could result in you inheriting them when you take possession of the property.
Some potential issues may be obvious, such as dead or overgrown landscaping or flaking paint. Conversely, has the owner made exterior improvements or other changes to the property without getting HOA approval? If these changes are not in compliance with the rules, what could happen to you if you owned the property? You may be able to force the owner to fix the problems as part of the sale agreement or provide cash at closing.
Insurance Responsibilities
As with the ownership of property, insurance provisions within a planned development can be divided, too, with the HOA covering some perils or areas and the homeowner responsible for others.
These are often mandated by state law. In some states for example, a condominium HOA must insure all common property, which includes every part of the building up to a unit’s unfinished drywall. Meanwhile, the homeowner is responsible for insuring all personal property within their unit, including appliances, flooring, cabinetry, and window treatments etc.
Check the law for the state you’ll be living in for the precise division of requirements. Confirm the HOA for the property you’re considering is adhering to those requirements.
Living in a planned development and being governed in part by the rules of an HOA can be a mixed bag. It offers the prospect of exchanging some control over your home for the reduced responsibilities of maintaining it, and for the benefit of enjoying shared amenities and security. It can, however, also trade the diverse look of a typical neighborhood for a more uniform appearance. However, there is a lower chance of a neighbor’s decorating taste or sloppy maintenance habits becoming a problem for you.
Hopefully reading about these four things you should know about HOA’s before buying has given you some insight into how to proceed along your home buying journey. If you decide to purchase a condominium or planned home, be sure to engage professionals, including a real estate agent, who is familiar with the community that interests you. I always have my client’s best interest at hand and I make it my business to get them the information they need to make solid decisions. Please feel free to contact me here and I would love to connect with you on Instagram and Facebook.
