What you need to know about HOAs
If you are on the hunt now, there is a good chance that you may end up finding your dream home in a community association.
About 25% to 27% of the American population lives in a community association – whether a homeowner, condominium, townhouse or condominium – according to the Foundation for Community Association Research. In total, there are around 347,000 community associations with 73.5 million US residents.
These associations are generally tasked with coordinating the maintenance of the common property of a building or a planned or gated community. They do this by demanding fees or fees and possible assessments to perform necessary repairs.
Of course, not all HOAs are created equal. Some are well-run and well-funded by a competent board and knowledgeable management company. Others may be plagued with struggles, costly repairs or inquisitive journeys.
Buying a house in a homeowners association comes with advantages and disadvantages. (Photo: fstop123, Getty Images)
"Some people love it, some people hate it," says Bryce Pennel, a real estate agent at Coldwell Banker in Beverly Hills, California. "It's partly who you are and what triggers you, if you like to do things solo or as a group."
Here are the pros and cons of living in a homeowners association, or HOA.
Pros of HOAs [19659010] Amenities: Many neighborhoods with homeowners' associations have facilities for the community, such as pools, tennis courts, playgrounds or gyms that members of good repute can use, and possibly save them money on gym memberships and the like.
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Maintenance: The main advantage of HOAs is that they take care of the common areas so you don't have to. There may be landscaping, roads and other common areas. They are also responsible for obtaining necessary insurance for community areas such as pools and playgrounds.
Ownership: If you are not happy with your HOA board, you can always run for board and help you set an agenda for your neighborhood. In that sense, you take ownership of your community with your house.
Cons of HOAs
Fees: The HOA quota, which can be charged monthly or annually, increases the cost of living in a neighborhood or building run by an association. In Beverly Hills, some of the luxury condos can charge up to $ 3,000 a month for the quota, Pennel says. In general, however, HOA fees are typically in the low hundreds of dollars.
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Part of your quota goes towards paying monthly expenses while the remaining funds go in in a reserve pool for major repairs or replacements down the road. Your HOA quotas can also cover costs you would otherwise pay for yourself if you did not live in an HOA, says Vanessa Beneze, a Century 21 Frank Frye Real Estate real estate agent in Licking County, Ohio.
"If HOA covers tools, water and garbage, then it could be a pro," says Beneze.
Whatever your quotas cover, it is important to pay them on time. If you arrive without setting up a payment plan, HOA can exclude your property.
Reviews: If the HOA does not have deep reserves and an unexpected but immediate repair comes up, all homeowners in the association may be charged a one-time assessment to cover the cost of the repair. Depending on the expenses, this may surprise you and your wallet.
Rules: Another disadvantage is the rules that the association sets for communal facilities, as well as factors that affect your home and habits such as the Proper garbage can label and approve paint colors or roof tiles, especially if you are in a designated historic district.
If you want to renovate your home – especially if you own a condo in an apartment building – you may need to submit your HOA approval plans before proceeding.
"These rules are generally in place for the good of everyone," says Pennel. "But when told that there are rules, people can get frustrated."
What to look for in an HOA
Before buying an HOA, be careful. It includes reviewing HOA's covenants, terms and conditions, or CC & Rs. There you should find society's rules and regulations as they apply to your home and society as a whole.
You should also take a look at HOA's finances to see if it has a healthy emergency aid reserve. Ask for the minutes of previous annual meetings. This is not always easy to get, says Beneze, who usually places it in the contract that her buyers see minutes before closing.
Beneze also recommends asking those living in the neighborhood about HOA and how it operates. You can get the most honest answers from people who are not interested in selling you a home.
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