10 Things to Know About an HOA
10 Things to Know About an HOA – In Orlando, there are several subdivisions, gated communities, and neighborhoods that are part of their own HOA. And HOA stands for Homeowner’s Association and is typically the Association or Board of members that manage the community, keep things consistent, and adhere to the rules and bylaws of the community. It’s important to understand the type of homeowner Association that you’re getting into if you’re choosing a home within the community. You’ll need to add on Association fees, understand the bylaws, and how the Association is run. Here are 10 things to consider when choosing a home and HOA.
#1. The type of HOA property.
Homeowner associations can be a variety of home styles such as single-family homes, condominium or townhouse communities, master-planned communities or even a cooperative. A cooperative is not exactly the same as an HOA but there are similarities. A cooperative is typically a governing board that amends rules and enforces them but living in a co-op you don’t actually purchase an individual home like you would with a condo or house. You share ownership of the entire building. A co-op has the oversight to approve or decline any potential members so financial history and other lifestyle choices might be strictly scrutinized.
#2. Added fees.
Homeowner associations will have monthly, quarterly, or annual fees that every member will need to pay into. This could mean less than $50 a month to several thousands of dollars each quarter depending on the community, amenities, and how the Association is managed. The more amenities and Association has and the more responsibility, the higher the price. Condominiums in high-rise, luxury buildings are typically the highest which can run several thousands of dollars each month. But of course, members/homeowners have the use of amenities such as swimming pools, concierge services, fitness facilities, and much more. Make sure you add on this additional fee when determining your monthly housing payment.
#3. Understand the rules of the HOA.
Before you to finalize the purchase of a home in a homeowner’s association you’ll need to approve the rules. You should receive a copy of the CC&Rs which stands for covenants, conditions, and restrictions. This will give you all the information you need to determine whether or not you can adhere to the rules. This list can be extensive and daunting to go over so if there are specific questions such as if you’re allowed to have a pet, noise ordinances, or pretty much anything specific, you can simply ask the Association directly. It’s also not a bad idea to have a real estate attorney go over the document to pick out anything that might be a red flag.
#4. Understand any special assessments.
Costs can vary depending on what the HOA needs to organize. Ask the Association about any special assessments that might be coming up or that the homeowners are currently involved in. This could mean an additional monthly or annual fee to replace siding, landscaping, building maintenance, or any major remodeling projects. Not only will you have to pay the monthly HOA fee, but you may also incur a separate special assessment and you may or may not be able to afford it. It’s best to find out now before finalizing the purchase.
#5. How healthy are the reserve funds?
A lot of times, if the homeowners are burdened with a special assessment, it’s because the reserve funds are not healthy enough to maintain additional updates or repairs. Association should have a healthy reserve fund account that can take on the burden of any of these special assessments without passing the payments onto the owners.
#6. Understand the HOA’s legal power.
Most states have laws clearly defining the role of the HOA, which includes guidelines for holding the board elections and what the bylaws may or may not prohibit. Make sure you understand that as an owner, you do have your own certain rights, but the HOA may control a lot more than you are aware of. Talk to your real estate attorney or real estate agent about any specifics.
#7. Talk to other neighbors.
Before finalizing the purchase of a home in an HOA, talk to other neighbors on how they feel about the homeowner association. If you get more complaints than positive accolades, there might be some hesitation. Ask how long they’ve lived there and if they like the way the Association is managed. Are there any suggestions, problems, or praise that they can give to the Association? This will give you a true snapshot of how the community is managed.
#8. Certain restrictions.
Unfortunately, a lot of homeowners don’t realize they have a certain restriction until they go to do something such as put up a fence, get another dog, install that TV satellite, or by an RV. A lot of those conditions and covenants will include these things but because they are so extensive, you may have overlooked it. Are you planning on buying a boat? There may be rules about keeping it in your driveway. The same goes for an RV, additional vehicles, certain pets, heights of fences, and even certain landscape and vegetation restrictions.
Most associations exist to maintain some level of consistency. They want all the homes to look the same, landscaping to be neat and tidy, and may restrict certain things like house colors, cars in the driveway, or landscaping features. If you like to have things “your own way”, this may or may not be an issue for you.
Some lenders will not even offer mortgages for condominium or homeowner associations that are currently under litigation. If a homeowner is suing the Association or vice versa, not only is the cause for concern but your mortgage may not be approved. HOA’s are collective legal entities and homeowners that choose a property within the HOA view the relationship as contractual between and among the parties. If something arises and a lawsuit incurs, this could prevent you from selling the property, buying the property, or refinancing the property and something to be considered before finalizing the purchase.
For more information on HOA communities within Orlando or choosing a home that’s not in an HOA, give us a call at any time. HOA communities are great option for a lot of homeowners and they can provide a lot of amenities. However, it’s important to understand all the legalities the come along with being a member of an HOA.
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