New homeowners, especially in large cities, are at least loosely familiar with homeowners associations or HOA’s. While, to some, HOA’s can seem more like another tax or insurance you pay simply for the “luxury” of living in a certain neighborhood or development, in reality, HOA’s are designed to simplify many of the things you would typically be responsible for as a homeowner.
When looking at neighborhoods and developments, it’s equally important to look at the HOA’s that govern those areas and understand them as best you can before making an offer on a home. Here’s what you should know about HOA’s.
An Overview of Homeowners Associations
In many planned developments, homeowners associations are simply a fact of life. As more and more big cities urbanize and an increasing number of planned developments pop up, more homeowners (about 20 percent nationally) are part of HOA’s. HOA’s for the most part are self-governed organizations run on a volunteer basis by members of the community.
As a homeowner, you’ll likely pay monthly or annual HOA fees which are a requirement as long as the HOA “governs” the development you live in. Those fees, however, are used primarily for the upkeep of common buildings, landscaping common areas, and general upkeep of the neighborhood. As a member of an HOA, you’re also bound to the HOA’s covenants, conditions, and restrictions which limit just how extravagant you can go with your home’s exteriors.
HOA Fees Vary
In general, HOA fees average somewhere around $350 per month but may have a greater range depending on your location, the number of amenities the community offers, and the facilities that require upkeep. For the most part, smaller planned developments with fewer amenities and common buildings will have lower HOA fees than those with more to offer.
Some things that can drive up HOA fees are your location (higher maintenance costs yield higher HOA’s), the number, size, and age of communal buildings, types of amenities available (community pool, clubhouse, golf course, etc.), and the level of security the HOA provides to the community (manned guard shack, for example).
All of these things attribute or take away from HOA fees depending on what is offered. Just bear in mind some of these bigger ticket-cost items when you’re searching for a home in a planned development.
Your Rights as a Homeowner
Part of what makes HOA’s great (and maddening at the same time) is that they often bind homeowners to certain community standards including landscaping, continuity across homes, and “police” activities that may otherwise decrease the value of the development.
As a homeowner paying into an HOA, you’re bound by the HOA’s covenants, conditions, and restrictions (CCR) that both keep you and the HOA legally bound to one another. On the one hand, you’re required to follow the CCR set forth, but the HOA is also required to fulfill their end of the bargain–just make sure you know what the HOA is responsible for before you sign on the dotted line.
Not All HOA’s or CCR’s are Created Equal
As we alluded to, HOA’s can vary significantly in what they provide and what their responsibilities are to the homeowners. Some are much more homeowner focused while others are more HOA-focused. Additionally, the CCR’s of those HOA’s can be starkly different from one neighborhood to the next, even ones that are side-by-side together.
Do some research of your own and read through the CCR’s of any potential developments you’re looking to live in and make a comprehensive list of the pros and cons of each. If you can’t find those CCR’s, have your real estate agent track them down for you. If you’re looking to buy a new home, you may be able to roll your HOA’s into your mortgage or escrow. To find out how, contact Tidewater Mortgage Services, Inc. today!
