Your HOA Explained

Dated: 05/31/2017

Views: 85

If you buy a condo, town-home or any home in a planned development, you'll likely be required to join an HOA, or homeowner's association. HOA's vary drastically in what the do, how much they cost, and most importantly what they restrict.

At it's core, an HOA is there to maintain common-use areas such as pools, club-houses or other meeting spaces, HOA Fees. Many associations go further and mandate what you can and cannot do with your home in the interest of maintaining property values or minimizing friction between neighbors. This usually takes the form of lawn-maintenance standards, restrictions on where people can park and the number of cars on the street, or the colors you can paint doors and shutters. Then again, it can cover a lot more than that...

HOA Fees

Just like HOA's themselves, the fees come in all shapes and sizes. Here in Nashville the cheapest I've seen was $10 per month, all of which went to maintaining the sub-division's sign the landscaping around it. Generally, the more amenities an HOA has to care for, the higher the fees. In subdivisions, this is usually limited to landscaping of common areas, maintenance of a pool and clubhouse, and possibly repair of sidewalks or paths.

For planned urban developments and town-home communities, the HOA is often responsible for much more. Though it varies, this often means taking care of the siding, any porch railings and roofs, and lighting fixtures throughout. They will carry insurance for these assets and have reserves in case major or emergency repairs. In a condominium, the costs are even higher - doormen or security staff is often present, elevator banks, as well as gyms and luxury facilities a sub-division HOA would need to care for add up to several hundred a month per resident.

And those reserves we mentioned? How healthy your HOA's reserves are is important, and you'll want your agent to check into it for you. The reserves pay for major or costly repairs that spring up, and are steadily built up as residents pay their dues. If the HOA isn't collecting enough or runs up against to many costs at once, the reserves may be depleted and you'd face either a rise in dues or an assessment. An assessment could be a few hundred or a few thousand dollars per resident, and you'll want to take a look at the association's history of special assessments.

Last, be aware what happens if you fail to pay HOA dues or assessments. While the association can take you to court, they'll more likely place a lien on your home.  A lien will inhibit your ability to sell or refinance your home, and require that the HOA be paid any back dues from the profits of the transaction. If the fees are extreme enough, the HOA can foreclose on the home to satisfy the debt.

HOA Restrictions

An HOA can restrict a great many things in the interests of the neighborhood and maintaining property values. I can't stress this enough - ever association is different, so you and your agent need to research the covenants they enforce and how they might affect you.

  • Home Improvements and Additions - If you're going to get into it with your association, this will be the reason. HOA's can mandate the color of your doors and shutters, your ability to put up a shed, and anything from major home renovation to simple Christmas lights. For some people, these restrictions are just a way to mandate a consistent appearance to the neighborhood and maintain values, but for others it can fly in the face of owning your home. If you buy a home with expansion and renovation in mind, make sure you've thoroughly researched your covenants.

  • Landscaping - Almost all HOA's will have rules requiring regular lawn care and barring trash, junk, or parking in green spaces. Some will take that a step further and mandate the types of plants and landscaping you can have to maintain a consistent look to the neighborhood. Also, large trees or bush lines may require trimming or removal, and it may not always be clear who's property and responsibility it is.

  • Pets - Often, an HOA will restrict certain breeds - either because they're considered "exotic" or "aggressive." Sometimes, the restriction will be based on weight - especially in condos where the noise of heavy dog paws can travel. Almost all will require leashes and proper waste disposal when out in public.

  • Parking - Some associates ban parking on the street or lawn, while others limit how long vehicles can stay in these spots. If you live in a PUD, town-home community, or condo, you'll likely have limited or assigned parking. If you're a family with children approaching driving age and wanting their own cars, this can pose a problem.

  • Rentals - If you're considering using your home for rental income, knowing the rules is vital. Many HOA's limit your ability to rent out your home or set a cap on how many rentals can exist in a neighborhood or condo. In some condos, the HOA will sell or issue a limited number of rental permits. This is all in an effort to make sure the community is made up of home-owners with a shared interest in maintaining the standards and property values. Likewise, as AirBnB has risen in popularity, many HOA's have voted to bar residents from participating in "short term rental" programs and drawing a steady string of strangers to the neighborhood.

HOA Boards and Voting

HOA's will have a board of residents who oversee and enforce the CCR's (covenants, conditions, and restrictions). The board and it's members are elected, but must adhere to internal bylaws and various state and federal restrictions. For instance, now HOA may violate the Fair Housing Act, the American Disabilities Act, or the Fair Debt Collection Practices Act. If you have a grievance with something the board has or hasn't enforced, you'll take it to them. While some boards may only vote among their members, maybe will put issues up for vote the community and recurring HOA meetings. If you're not happy with a policy or the way your HOA is being managed, consider running for a spot on the board yourself.

No matter what sort of HOA you have - cheap or expensive, strict or lax - it's important to know the conditions and restrictions. You could move into a neighborhood where little is enforced, and neighbors vote to replace the board with more rigid leadership. Likewise, new rules or costs may always be voted on, so be sure to attend your regular meetings. As a member of the community, it's important to have a voice and say in how things are run.

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