Homeowners Associations Fees, Services & Rules
Home purchases with shared amenities are on the rise these days. Single family homes are still the most popular housing choice, but many buyers are also purchasing in communities with pools, clubhouses and other shared spaces.
When you're buying a house within a planned community, whether it's a development or a condominium, you're going to have a homeowners association. And where there is an HOA there are rules and there are fees.
Here's what to expect from your Homeowners association, before you buy.
What’s a Homeowners Association?
A homeowners association is a group created to establish and maintain the standards of a development or community. An HOA is typically created by a collection of neighbors but can also be established by the real estate developer. The homeowners association enforce agreed upon rules and also maintain common areas in the community or building.
““The homeowners association enforce agreed upon rules and also maintain common areas in the community or building.””
HOA rules can cover such things as sidewalk and home maintenance, how often you mow your lawn, and even what colors you may paint your door.
If you plan to build or change anything on the exterior of your home it will likely need to be approved first by your HOA.
HOA fees are typically associated with upkeep. They’re usually between $200 to $400 a month, but can be as high as $1,000 or more depending on where you move. Pest control, lawn care, pool cleaning, elevator repair and other costs are paid for by your HOA fees.
Typically a homeowners association is governed by a board of directors that will hire contractors and businesses to complete these tasks. The board of directors are chosen by those in the neighborhood or building to represent them and their interests. Before you purchase a home governed by a homeowners association, it's a good idea to talk with as many people as you can within the group to get an idea of their priorities and see if they match with yours.
What to Look for in a Homeowners Association When Purchasing
Laws governing HOAs are going to vary from state to state. The majority of HOAs are established as incorporated non-profit entities. When you buy a new home that is governed by a homeowners association, you agree to follow their rules and they have a legal right to enforce them. It will vary greatly from one HOA to another, but enforcement can be a sternly worded letter or the threat of legal action. For this reason, it's critical to make sure that your values and priorities align with your potential homeowners association.
Want to paint your door blue when everyone else's is red?
Sorry.
Think you can park an extra car in the driveway?
Think again.
Before you commit…
Ask for a copy of the HOAs rules and bylaws. You may be able to get them from the seller or the sellers agent. If there is a management company you may also contact them. Be careful when looking at homes online. While seller agents are required to disclose the cost of HOAs and any other fees associated with a home purchase, you won't always see them listed on sites like Trulia or Zillow.
Are HOA Fees Affordable?
Obviously your mortgage is only a portion of your expenses when you purchase a house or condo with an HOA.
HOA fees vary broadly and will be determined largely by the services they provide. These fees can be charged monthly, quarterly or annually. Whenever they're collected the bottom line is the’re going to eat into your monthly income.
Taxes, insurance, utilities and other expenses all need to be considered. HOA fees are one more bill you'll need to pay, so make sure that it fits in the budget.
Whatever the HOA fees are, they’re not negotiable.
One more thing…
HOA fees can be increased. Oftentimes with little warning. If your budget would be stretched to its maximum at current HOA fees, how would it fare if the HOA fees increased by $50 or $100? It’s not supposed to happen, but it often does.
What Do HOAs Do with the Fees They Collect?
Before you purchase a home, you'll want to understand who controls the purse strings and where that money goes. Money being collected by an HOA should go towards services vital to the upkeep of the community.
If you go to a showing or an open house take note of the common areas and make sure they're up to the standards of a community that you would like to call home. Have the lawns been mowed recently? Is the pool in great shape? If it's starting to look a little run down this could mean bigger bills down the road. Make sure you ask around. Talk to your real estate agent. Talk to current tenants or homeowners. Gather as much information about the place as possible to avoid any surprises coming your way.
Living with Your Homeowners Association?
Remember that a homeowners association is made up of your neighbors. These people just want what's best for the neighborhood, their building and their community. Making sure that your lifestyle is on par with their community standards is key. If you have kids but there is a prohibition on playground equipment in your backyard, you may want to look elsewhere. On the other hand, if there is a community playground that's well maintained, than it may be the perfect place for you.
Only you know if the community is the right fit for you. But when it comes to one with a homeowners association, it's going to come to more than just the perfect house or condo. HOAs are meant to be advocates for the community. They do a lot of work, but they can be a pain in the butt.
Do your research and make sure they are the right fit for you.