Buyers who have no experience with homeowner’s associations (HOAs) often know little about them, except that they will be charged a monthly fee over and above their monthly mortgage payment. So if you are considering buying a property with shared common areas, such as condominium complexes and planned unit developments, you may want to read on.
Here are the answers to some customary buyer questions:
Q: What is a homeowner’s association (HOA)?
A: An HOA is charged with ensuring that your community?—?the common areas outside your condo walls or property lines?—?look good and function well. They are responsible for maintaining the landscaping, the swimming pool and all other shared areas. They charge a monthly fee for these services, and set rules and regulations for the homeowners to help ensure that community standards are upheld.
Q: How much are HOA fees?
A: To cover maintenance expenses, HOAs charge fees generally between $200 and $400 per month, sometimes lower and sometimes higher depending on the locale, the size of the residential units, and the services provided. Most HOAs charge a bit more than the actual maintenance costs in order to build up reserves to cover emergency repairs or unforeseen costs. If there is not enough reserved to cover such a needed expense, homeowners may be charged a special assessment fee.
Q: Who runs the HOA?
A: The HOA is governed by a board of directors typically elected by the homeowners in the complex. They meet regularly to discuss and vote on HOA issues. Meetings are open to all homeowners and any resident homeowner may run for a board seat.
Q: How do I know the HOA rules and regulations?
A: All buyers receive a copy of the HOA’s covenants, conditions and restrictions (CC&Rs) for their review and approval before escrow closes, and by proceeding with the purchase, they are agreeing to abide by them. For safety and aesthetics, the CC&Rs may govern such things as what color you may paint your house, what type of pets you may have, and the style of your front door, roof or mailbox. If you break the rules, or fail to pay your dues, you could be fined, or ultimately foreclosed upon.
Q: What about homeowner’s insurance?
A: As with all private residences, homeowner’s insurance, or hazard insurance, (1) is required by the lender to insure against damage or destruction to the property and/or improvements, and (2) is highly recommended to insure against damage, loss or theft of contents or injuries sustained on the property. But the HOA does not oversee insurance issues. The title company works with the homeowner’s insurance provider to make sure the first coverage period is paid in full following closing and that the amount to be paid is correctly stated on closing documents.