HOA Basics: What to Know Before You Buy

Two floor apartment complex

Before signing on the dotted line for your new home, make sure you know what your homeowners association (HOA) fees are and what they cover.  Because most new planned communities have HOAs, whether you’re buying a detached home, condo or townhome, factoring in that added cost is a necessary part of your home-buying budget.

Depending on the amenities, HOA fees can be a big bite out of the budget. Monthly fees in our area typically range from $50 on the very low end up to $250 or more.  However, for single family homes in communities with no amenities, fees can be as low as $25 per year.

What does that payment cover? That depends on where you live.

The most basic HOAs maintain the common areas of a community. That can be landscaping, but it can also include a recreation center, parks or trails. The general rule is, the more amenities, the higher the fees. Some condominium complexes have everything from pools to fitness centers, spas, saunas and clubhouses.  Associations in a condominium or townhome complex will cover most things outside the individual units, such as the roof, paint, elevators or stairs, heating and air conditioning in common areas, and pest control. The HOA should also have insurance for the exterior of the building.

City services such as trash removal, water and sewage are also commonly covered by HOAs and sometimes even cable services will be included with the fees. The dues in planned, single-family-home communities often include security in gated communities.

In addition to maintenance and amenities, HOAs also have rules, called covenants, conditions and restrictions (CC&Rs) that all homeowners must follow. That can be anything from how many pets you can own and what color you paint your house to whether your kids can play in the street or you can have a boat in the driveway. HOAs are responsible for enforcing these rules and often pay a professional property management company to communicate with the homeowners and make sure everyone is in compliance. Property management companies are also responsible for the community’s day-to-day operations and maintenance.

Be aware that HOAs are able to levy special assessments for major repairs, if needed.

Before buying a home, research these three key elements:

  1. Financial Health of the HOA
    Make sure the HOA is properly funded. Request a copy of financials available to homeowners. Check out how often dues have been increased over the years.
  2. Maintenance Responsibility
    What is the HOA’s responsibility and what is the homeowner’s responsibility?
  3. CC&Rs
    Understand the rules before you buy.

The more you know, the easier it is to make the right decision.  And of course, your real estate agent should be a resource for any questions you may have.

Full article on RISMedia.com.

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