There are several factors to take into consideration when looking for a new home. Your criteria will include basics such as price range, neighborhood, and proximity to places you and your family utilize the most. Another consideration is whether you want to live in a planned community.
Planned communities have their benefits. Many come with a Home Owners Association. Commonly known as an HOA. These associations have a mandatory association fee that needs to be considered when budgeting for your housing costs.
There is a lot to consider before making a final decision on an HOA governed housing development. Keep reading for a quick guide on what you need to know about HOA Management.
What is HOA Management?
HOA Management is a process in which a management team is charged with ensuring residents of a housing community abides by the rules and regulations. The thought process behind HOAs is if homeowners are governed by the same rules and regulations their property values will increase.
In addition, the community’s appearance will be uniform and properly maintained.
The HOA is generally operated by a board of directors that are responsible for establishing guidelines and penalties. The BOD is established by the developers of the community and generally consists of homeowners within the development. In other instances, the developer will contract HOA management services out to a professional firm.
An HOA doesn’t just apply to single-family homes. Many condominium properties use HOAs also.
Are Homeowners Required to Join the HOA?
Homeowners that buy within a planned community do so with the expectation of having an HOA in place. It is a requirement that buyers agree to in the home purchase agreements.
Within the agreements are the rules and regulations. If you are not comfortable with the rules, you will want to find another community. All homeowners are expected to abide by the rules which could include things like:
- Only painting your home in certain colors
- No parking on the streets
- Notifying the HOA when you’ll have gatherings to receive special parking permits
- Only having yards displays certain times of the year
- Maintaining your lawn
- Not being able to rent or lease your home if you move
The rules may seem invasive to some, but to others, it provides a better living experience.
What Do HOA Fees Cover?
In simple terms, the HOA covers the things that caught your attention when out house shopping. The beautiful landscaping, 24-hour security, keycode access, recreation facilities, and other amenities.
Planned communities offer a lot of amenities that must be maintained at all times. These things come with a cost. Aside from routine maintenance, there are electrical, water, Wi-Fi, and other services homeowners enjoy.
If there is a clubhouse, pool, golf course, or tennis courts, there are property taxes and fees that must be paid.
Membership Fees vs. HOA Fees
Some planned communities charge a membership fee for use of the golf course, the tennis club, or fitness center. If there is an onsite entertainment facility you most-likely will have to pay to use it for your event.
These fees will be in addition to your HOA fees.
Homebuyers must also consider there are amenities included in their HOA cost they will never utilize. It does not mean they get a reduction in their monthly fees.
How Are Fees Paid?
Your homeowner’s association fees can vary and depend in part on the community itself. The more high-end the community the more expensive the fees will be. On average HOA monthly fees are roughly $200 as an average.
HOA fees are similar to taxes and insurance. Some HOAs allow for an escrow account. Homeowners also have the option to pay directly on a monthly, quarterly, or annual basis.
There are circumstances that will permit an HOA to increase these fees. Circumstances such as a drop in homeownership could negatively impact remaining homeowners. If the community is planning to add or update amenities, property owners could see their HOA fees increase.
What Happens if You Do Not Follow the Rules?
It is important for homebuyers to fully read their HOA contract. This is a legally binding document. In addition to the rules and regulations, it will also outline the penalties and fines a homeowner can face if they are found to be out of compliance.
The HOA is not there to siphon money from residents. Their goal is to ensure the community is properly maintained. Therefore, there have to be penalties for those who do not follow the rules.
Each HOA has a penalty phase. This can include:
- Notification of the infraction and remedies
- Warning steps for not complaining
- Assessment of fees
- Collection efforts
- Foreclosure filings
Yes, you could potentially lose your home for failure to pay fee assessments. In this way, HOAs work similarly to your local city and county municipalities. If you do not take care of code compliance issues the municipality can fix the problem and assess the homeowner.
Do HOAs Supersede Local Government Rules?
No, the HOA cannot place restrictions on its members that supersede local government code compliance. However, the HOA could have rules that the city or county may not.
An example could be the type of mailbox a homeowner can have and the color it must be painted. In most territories the rules either state where the mailbox is to be located. At the curb x amount of feet from the driveway, or attached to the home and near the front door.
With the HOA, uniformity is important so they may have a unique structure or design that every home in the community has. In most cases, when the home is built, criteria like this will be specified in the plans.
Is an HOA Community for You?
When buying into a community that requires an HOA, weigh the pros and cons to determine if this is financially feasible for your budget.
Are you a homeowner or thinking about buying? Keep checking back for more great articles for the home.