When you purchase a townhouse, condo or any property within a planned development, you are required to join that development’s homeowners’ associations (HOA) which includes paying a monthly or annual HOA fee.
Generally, the HOA is in charge of the upkeep of common areas, landscaping and the buildings themselves. Each HOA is unique however, and the responsibilities (and fee amount) of each varies based on the development and the amenities that it has. A more upscale complex may include a wide range of facilities such as swimming pools, clubhouses, fitness rooms, security gates and tennis courts.
Also, beyond keeping the grounds in good condition, an HOA also sets the “code of rules” that governs life within a development. This set of rules must be followed by all residents and is known as the CC&Rs (covenants, conditions & restrictions). CC&Rs may dictate a variety of things: from the types of vehicles that may be parked on the street to fence height restrictions to the color of your window frames. If you, as a homeowner, decide to break one of these rules, you must appeal to the HOA to grant you a variance. While CC&Rs are a great way to keep a neighborhood consistent, they could pontially limit your creative juices when it comes to decorating your home!
An HOA is beneficial, because it ensures that all residents are equally responsible for maintaining the condition of their community. This helps to guarantee a high quality of life, while also preserving property values for the units within the development.
However, HOA fees do tack on an additional cost when it comes to owning a home and it is essential to factor that cost into your price of living. Average HOA fees are generally around $400 a month, but could run less or more based on the amount of amenities.
Another responsibility of a homeowner’s association is plan for the long-term well being of the community. That means looking ahead to larger scale repairs and improvements that will need to be made in the future. Each HOA holds a reserve fund, which is kept to pay for these long term projects, as well as any emergencies that may arise. However, if the reserve fund is inadequate, the association may require all occupants to pay a “special assessment” in order to supply the necessary funds. Special assessments may occur at any time.. meaning another unexpected cost for development residents.
HOAs are either professionally managed or are run by residents within the development. There are pros and cons to both scenarios, so we recommend getting in touch with the HOA prior to joining the development. It is a good idea to get a feel for the way that the development is run and to evaluate who is making the decisions that will affect your daily life. You can also find out specifics about that exact homeowner’s association.
Some good questions to ask:
– What services are covered by your HOA dues?
– Are there any services for which you have to pay extra?
– How often do fee increases occur, and by what percentage?
– Are any special assessments planned for the immediate future?
As a homeowner (especially one paying HOA fees) it is always better to be over educated, than under educated. Stay involved in your community, be aware of the CC&Rs and take full advantage of the perks of having a homeowner’s association!