Think of a homeowners association as a small governmental body that manages and keeps the peace in your neighborhood. HOA’s aim to maintain a higher quality of life for tenants and homeowners. To that end, living in a community run by an HOA can have many advantages like amenities, increase in home value, and maintenance services, to name a few.
However, every HOA is different, and it’s important to know the rules and regulations when considering where you’re going to move. Maybe you were inspired by HGTV to buy a new townhouse and convert the basement into an income property, only to learn after the fact that the HOA forbids this. Studying HOA bylaws–with the help of an attorney–and asking questions are critical before making such a monumental purchase.
Here’s what you need to know about your HOA before moving in:
Association Dues and What They Cover
Homeowners association fees are wide-ranging, so it pays to be knowledgeable on how this impacts your cost of living. It’s also important to know what exactly you’re paying for. Does the $3,000 annual HOA fee include snow removal, water, waste-collection, and upkeep of common areas?
Reserve Fund Availability
A reserve fund is an allocation of dues used for unforseen projects. For example if a large repair is needed in the common area following a storm, the HOA would access its reserve without any cost to residents. The absence of a reserve means the burden is put on residents to pay a special assessment fee. Do your homework on this one and request the minutes of previous board meetings to see if special assessments were administered in the past or if there are plans for them in the future. You can also verify that the HOA maintains a healthy reserve by reviewing a copy of its financial statements.
Parts of the Home that Must be Maintained by the Homeowner
From landscaping and deck maintenance to roof and siding, services can really add up. Scan the guidelines because this where you can find the true value of your HOA. Some associations cover none, all, or somewhere in the middle.
What items does the HOA replace and repair, and which are your responsibility? Some HOA’s may take care of roof leaks, exterior painting, and driveway pavement repairs. But things can get tricky. With roof leaks, for example, the HOA may only address water damage from the paint in, while the homeowner would be responsible for the actual roof portion. It’s important to note that some HOA’s may not cover anything at all.
Visitor Parking Guidelines
Operating in the best interest of residents, HOA’s can have firm policies with regard to visitor parking. Can friends and family come and go as they please, or are guest parking passes required? How many designated visitor parking spaces are available? Are holiday parking policies different? Often, it is the residents’ responsibility to ensure that guests are abiding by the parking regulations. You’ll have to decide if the rules are welcoming enough for company or too uninviting.
Restrictions on the Exterior of the Home
You’ve found the perfect paint combination of apricot, peach cream, and green for your exterior walls and an adorable mailbox to match. Then your excitement bubble is burst when you learn that HOA bylaws forbid it. There may also be fence, planting, and other restrictions. Again, do your due diligence and educate yourself–read the documents with a fine tooth comb and ask questions–before buying.
For pet owners, the HOA must be pet-friendly. If you’re a dog-lover like me, make sure dogs are allowed. But don’t stop there. Check how many you can have and if there are weight, size, or breed restrictions. I’d hate to see you fall in love with a home when your dog isn’t allowed. The same goes for cats, rabbits, hamsters, and other pets.
Ability to Rent
Some homeowners associations may prohibit renters in the interest of maintaining home prices and community safety. Of course it depends on the HOA, so review the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) or bylaws before making an offer. If the inability to rent is a dealbreaker then you’re better off buying in a different HOA-managed community.
Not all homeowners associations function equally. If you are targeting a planned development, research the HOA guidelines and speak with your attorney to determine if they have your best interests in mind and ultimately if the community is the right fit for you.