Home Owners Associations (HOA) govern the homes, condos or townhomes within a subdivision or building. They typically provide services and amenities such as maintenance, landscaping, gym facilities, playgrounds, and/or pools. Homeowners pay HOA fees to cover the costs of maintenance and repair.
Here are some of the pros and cons you'll face when making the decision about life with an HOA.
Pros:
Residents of a neighborhood governed by an HOA won't have to worry about a neighbor who never mows their lawn, or whose dogs bark nonstop. This helps protect your property values.
If you enjoy working out, swimming, or throwing big parties, an HOA may provide you with a pool, gym or clubhouse, enriching your leisure hours.
The HOA will carry liability insurance for the development or building. If something happens, the insurance and pooled reserves can help alleviate individual costs for buildings and common areas.
Depending on the rules of the HOA, some repairs and replacements will be handled by the Association. This may include roof repair and replacement, balcony replacement, exterior painting, staircase replacement etc...
Cons:
Membership in an HOA is mandatory, so you can't "opt out" if it doesn't interest you.
Your HOA fees may increase sometimes on an annual basis. Increases in insurance premiums, cost of maintenance and other factors may come into play.
The HOA may have to implement a special assessment to cover an unexpected expense such as a sewer line replacement or balcony replacement. HOA's are supposed to build reserves and save for scheduled repair and maintenance but reserves may not cover a specific expense and the cost has to be shared by the home owners.
You may not agree with some of the HOA rules so do your homework! Some examples, some HOA's will not allow you to park in your driveway or they have rules about overnight guests parking on the streets. Hardwood floors might not be permitted if you live above another unit. Pet restrictions may apply. Every community is different so it's important to understand the rules.
If you consider buying a home, condo, or townhome with an HOA, you'll want to learn as much about it as possible.
Make sure to read all of the rules and regulations about the community
Read the HOA meetings minutes! You'll learn a lot about the community including complaints, concerns, problem homeowners and much more.
Consider hiring an HOA Review consultant. They will review all of the HOA docs and provide you with feedback on the rules and the solvency of the Association.
Keep in mind, your realtor is there to help navigate you through your home buying, provide you with documents, negotiate terms and coordinate vendors. They will review the documents but they are not attorneys or CPA's. Providing advice on the solvency of an HOA is outside the scope of duties of a Realtor. You should contact a CPA or attorney for advice.
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