As a homeowner in a Homeowners Association (HOA), it's crucial to be aware of your insurance obligations. A thorough...
Questions to Ask Before Buying Your Next Home with an HOA
A homeowners association, or HOA, is a fairly common organization in neighborhoods across the country. If you are considering buying a condo or a home in an HOA development, it’s important to keep in mind that you will have to pay into a Homeowner’s Association and follow the rules/bylaws of the association while you’re residing there. Before you move forward with a purchase in an HOA community, it’s important to fully understand what your new HOA provides and how it operates. Here are some essential questions to ask about an HOA before you purchase a home.
How much are the HOA fees, and what do they cover?
All HOAs charge homeowners fees, or dues. Typically, dues are paid monthly, quarterly or yearly. As soon as you become a homeowner within the community, you’ll be legally obligated to pay these dues. These dues typically go to general maintenance and upkeep of the property, and other things the HOA needs to pay for throughout the year. It’s important to figure out what the dues are ahead of time and exactly what they cover, so that you can better plan out your financial arrangements.
What are the HOA rules?
Typically, a homeowners association will have a list of rules and regulations that residents are expected to follow when they live in the community, known as Covenants, Conditions, and Restrictions, or CC&Rs. Each HOA is different and requires different things, so it’s important to know what the rules are for your particular HOA before you buy.
These regulations can dictate everything from what colors you can use to paint your home to how many vehicles you can park in the driveway. Some commonly covered guidelines in homeowner’s association rules and regulations include:
- The home paint color
- Pet ownership
- Where you are allowed to park
- Whether you can build decks or patios
- Whether you can run an at-home business
- What type of landscaping you’re allowed to do
- Whether you can have satellite dishes
- How high your fence can be
- Whether you can put up mailboxes, flags and other items in your yard
How are the HOA reserve funds? Is there any open litigation?
There are several signs that can indicate the homeowners association isn’t doing as well as it claims financially. First is a lack of reserve funds. Low reserve funds may mean fees increase in the near future, or an indication that the association doesn’t keep up the grounds as well as it could be. All properties age and you’re paying dues so that your HOA keeps the property in nice condition. Try speaking to residents (both past and present) to get the scoop, and be wary if there are complaints about poor maintenance or fund misuse. Also, be sure to ask if the development has changed owners or if there is any pending litigation that might be a red flag.
What does the HOA insurance cover?
As with the ownership of property, insurance provisions within a planned development can be divided, too, with the HOA covering some areas and the homeowner responsible for others. These are often mandated by state law, so it’s important to check the law for the state you’ll be purchasing in for the precise division of requirements. Confirm the HOA for the property you’re considering is adhering to those requirements.
Catastrophe insurance is particularly important if you’re considering a condo or townhouse purchase in an area prone to major natural disasters, such as floods, earthquakes, blizzards, wildfires, tornadoes, or hurricanes.
Can you see the condo board’s meeting minutes?
One of the best ways to understand the community you’re about to join is to look at the minutes from past meetings. These notes will help you get a better idea about how the place is run and the current financials, as well as the most common complaints from residents and how they’re handled.
Purchasing a home or condo is exciting, but it’s important to learn everything you can about the HOA and community beforehand. If you’re looking for an experienced HOA management company, APS Management can help. Take a look at our services, or contact us for a consultation.