7 Things You Should Know About Buying A Home With An HOA
Homeowner’s associations have a complicated reputation. Personally, I love living in a neighborhood with an HOA, but some buyers refuse to even look at homes that have one. So, what’s the big deal?
The reality is HOAs can be highly beneficial to neighborhood residents when managed correctly. That being said, it’s important to do your due diligence when buying a home with one. Here are 7 things you need to know:
Not All HOAs Are Created Equal
Every HOA has a unique set of bylaws, covenants, restrictions, amenities, etc., and not all HOAs are managed the same. Make sure to take note of the condition of the neighborhood and amenities to see how well the HOA has maintained them.
An HOA Can Protect Your Property’s Value
Because HOAs have a certain set of rules homeowners agree to when they purchase a home in the neighborhood, they can generally prevent residents from doing things to their homes that would lower the value of the homes around them - for example, significantly deferring maintenance or having several non-operable cars parked in the driveway.
You Generally Need Approval To Make Changes To Your Home
HOAs almost always have guidelines that detail how a home’s exterior can look. If you plan to make changes to the exterior, like changing the paint color or adding a shed, you will need to go through your HOA’s architectural review process. This doesn’t mean you can’t make changes, you will just need approval beforehand.
HOA Code Violations Can Become Liens
The way HOAs enforce their rules and regulations is through a warning and fine system. If fines by the HOA go unpaid, the HOA can put a lien on your property. If the lien is large enough, in Colorado, the HOA can foreclose on your home.
It Will Change Your Monthly Housing And Closing Costs
HOAs collect dues from homeowners on a monthly, quarterly, or annual basis. What these dues cover varies based on the HOA, but oftentimes they will go towards things like management of the HOA, maintenance of common spaces, amenities like a pool or clubhouse, and common utilities. HOAs also collect funds at closing to prepay dues, pad reserves, and process a change in homeownership.
You Get To Review The HOA Documents Before You Purchase
And you absolutely should.
There is a period of time within a contract to purchase a home in an HOA where you will be allowed to review all available HOA documents. This is an opportunity for you to see what rules you’ll be expected to follow and how well the HOA has managed its funds.
Think About Getting Involved
By serving your association, you can meet new neighbors, build relationships with board members, and create a significant positive impact on your neighborhood.
One of the best ways to protect yourself in a transaction involving a home with an HOA is to hire an agent with experience dealing with various HOAs. Want to learn more? Schedule a complimentary consultation!
