February 23rd, 2019 12:33 PM by Jackie A. Graves, President
of homeowners associations, or HOAs, has grown considerably over the last 50
years. In the 1970s, some 2.1 million people lived in HOAs, but today that
number is around 70 million, according to a report by the Community
Associations Institute, or CAI.
rise in HOA popularity, they have their detractors. There are Facebook and
Reddit groups dedicated to HOA horror stories, which run the gamut from minor
inconveniences to lawsuits.
More than 80
percent of HOA members report a positive experience, however, according to
CAI’s Homeowners Satisfaction Survey, published last year. The people who don’t
like their HOAs often don’t pay attention to the rules until they affect them,
says Dawn Bauman, Senior Vice President at CAI.
get into an HOA, it’s important to ask questions. Also, before you buy a house,
drive around the neighborhood and talk to people who live in the community. Ask
them about the HOA — people are usually very honest,” Bauman says.
let’s delve into the basics of HOAs, namely what they are and why the rules
How HOAs work
is a popular terms for “community association,” but can go by other names as
well, such as: property owners association (POA), common-interest development
and mixed-use community. Although there are differences among them, the common
function remains the same, which is to manage the neighborhood in a democratic
way to maintain the integrity of the community as well as property values.
are made up of the homeowners and governed by an elected or hired board of
directors. In larger communities, it’s not uncommon for the HOA board to be
governed by a full-time manager. In all cases, the HOA members have a voice in
community decisions and new rules implemented.
important to be involved in your HOA. This is your responsibility as a member
of the association. You don’t have to go to all the meetings, but you should
keep up with what’s going on and definitely vote,” Bauman says.
Pay attention to these three letters: CC&R
conditions and restrictions, more commonly known as CC&Rs or just
covenants, are the rules HOA members must follow. The CC&Rs are part of a
binding contract, which is usually attached to the deed for the property. That
means if you buy a home in an HOA, you must adhere to the CC&Rs or, in the
worst-case scenario, you could end up in court owing a mountain of fees.
have to take these covenants very seriously. Most courts will interpret them
reasonably but you could still end up with a lien on your house and thousands
of dollars in legal fees,” says Dana Anderson, attorney at The Law offices of
Dana Anderson in Orlando.
rules of CC&Rs can be made up by the developers or the property owners or a
combination of both. Rules can be retroactive, so what was once allowed might
no longer be if the HOA members vote in favor of the new rule. These rules can
run the gamut from how many pets you can own to the type of holiday lawn
decorations you can display.
The rules are
in place to make sure your community meets agreed-upon standards — so it’s a
democracy that requires everyone’s participation to function effectively,
often account for community amenities like playgrounds and pools. For folks who
want to live in a place that is bound by rules to maintain the community in a
certain way, HOAs can be beneficial.
buy a home in an HOA, ask to review the minutes of the association’s meetings
for the last year or two. That way you can be clued in to any ongoing issues.
In addition, you or your attorney and/or accountant should review the finances
of the association to make sure it’s operating without problems and has enough
in reserves to maintain and update common areas.
Here are five
questions you should ask.
Do I have the budget to pay HOA fees?
will breed resentment faster than one you can’t afford. Before you become
seduced by a uniform exterior color palette of eggshell and oyster white or a
community lawn service, make sure you can afford the HOA fees.
HOA fees can
cost between $200 and $400 per month, or the equivalent of a car payment. Not
only that, but the fees can increase. In some states, there are rules governing
how much and how often the increase can be. Some HOAs just require a majority
vote from members to hike dues.
If you don’t
pay your fees there can be serious consequences. First, you’ll most likely lose
your community privileges — which is small potatoes compared to more serious
repercussions like the HOA putting a lien on your property.
HOA fees on time is very important. I’ve had a number of clients who forgot to
pay fees for a number of reasons. What happens is the HOA tacks on late charges
that add up over time. The HOA can put a lien on your house to collect those
fees,” says Anderson.
Will I ever want to sublet or AirBNB my house?
your house via Airbnb or other short-term rentals is something you want to do,
then an HOA-bound property might not be right for you.
out that it’s not uncommon for HOAs to prohibit short-term rentals.
is buying a home or townhome, check in with HOA rules to make sure they allow
short-term rentals,” Bauman recommends.
Even if they
do, new HOA rules can be created anytime, usually with a majority vote. That
could mean your Airbnb business could be scrubbed if the community votes to
Does the association allow pets?
policy could be a deal-breaker for some homeowners and a dream come true for others.
If you have a pet or want to have a pet down the road, make sure you ask about
the HOA’s pet policy before you buy in the community.
Just what are the restrictions in this community?
homeowners, knowing that their neighbor’s lawn will never be weed-infested nor
will their house be painted purple is the most attractive benefit of an HOA.
The advantages include maintaining property value and creating a uniform
aesthetic throughout the community.
restrictions also mean checking with the association if you want to add
something, like a fence or mother-in-law suite, to your property. There are
usually rules homeowners must follow when making additions to their homes.
Are there any outstanding issues between current homeowners and the HOA?
One of the
first questions you should ask the seller is if there are any problems they
have with the HOA that need to be addressed. The last thing you want is to
inherit HOA fees or costly projects — such as removing a fence or repainting
the exterior because they violate HOA rules.
laws require homeowners to provide buyers information on the HOA, including a
letter saying they are in compliance, this is often referred to as an estoppel
“You want an
estoppel letter, it’s a letter that shows all dues are paid. This is important
because it prevents the HOA from coming back later and claiming you do owe
money. An estoppel letter won’t be contradicted in court,” Anderson says.
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