Buying within an HOA: Need-to-Knows

Buying within an HOA

One of the things you may have heard of when shopping for a condo, townhouse, or other planned community or gated development home is that you will be required to join the homeowners association – also called an HOA. A homeowners association generally manages and maintains the common areas of the community, seeing to daily maintenance, repairs, and upgrades of things like landscaping, security, elevators, lighting, recreation areas and so on. Homeowners associations also have sets of bylaws and the ability to enforce them. Members pay monthly dues and occasional special assessments to the board, which in turn hires a property management company to carry out the day-to-day functions.

Homeowners associations are not the right thing for everybody. The bylaws and covenants conditions and restrictions are something that everyone in the community is expected to uphold and abide. This can come down to regulating what color you can paint your home, regulating the height and type of your fences, or dictating what plants you may and may not in your individual landscaping. House and Garden says that you need to do your homework!

  • CC&Rs: These are the thing about most HOAs that turn most people off. They cover everything from what kind and how many pets you can have, to the color of your house and plantings, to whether you can even park in your driveway overnight.
  • Bylaws: These are the bylaws that regulate the HOA itself – and these are subject to state law, as well as county laws.
  • HOA Financial Statements: The budget explains in detail the expenses and financial condition of the HOA and can give you an idea of financial health, mismanagement, and reserves in cases of events such as hurricanes, tornados, floods, or other perils and hazards.
  • Meeting Minutes: When you want to know how the association conducts its business, and see how meetings are run, then this is where you look. Once you have made an offer, these documents should be made available for you to study, and there should be a contingency clause to allow you to withdraw your offer without penalty should they be something that’s not for you.
  • Seller beware, you will need to provide your buyer an Estoppel Certificate, showing all outstanding fees. Most HOA’s hire a management company who is responsible for preparing the certificate, the management company can charge any fee they see fit, and some fees can exceed $500.  This fee is rarely addressed by the HOA but is one your association should negotiate when hiring or renewing a management contract.

Word of Warning: New Developments

When you are buying into a new development, there may not be a HOA board until the developer appoints one – and that board can be stacked with the developer, their employees, and even family members. This can cause some potential conflicts of interest, and if the transition from developer control to community control is not handled in a timely manner with total transparency on behalf of the developer, things can get messy. As nice as that new home is, doing your homework on a developer’s previous projects is always a good idea, and when in doubt about any part of the documents, consulting a legal or financial professional is always advised. If you have the nagging feeling that somethings out of joint, you owe it to yourself to speak to someone who knows what to look for.

Founded in 2009 during one of the slowest real estate markets in the past half century, First International Title has grown from a handful of offices to over 30 offices throughout the state, from Key West to Pensacola, including its company headquarters in Coral Springs. We provide closing services in English, Spanish, German and French. With a combined 1,000 years of experience, our staff has extensive experience closing residential, refinance, reverse mortgage, short sale, REO, deed-in-lieu and commercial transactions. We do not outsource or offshore any portion of our core title services. We employ our own searchers and examiners to ensure quick turn times and accuracy. At First International Title, we put our customers first.

Tagged with: , ,
Posted in Real Estate
%d bloggers like this: