If you’re moving into a condo, townhome, or gated or planned community, you’re going to be a part of a Homeowners Association, or HOA. HOAs make and enforce the rules these communities have to abide by. When you purchase property within an HOA’s jurisdiction, you automatically become a member and are required to pay their dues.
Well-run HOAs can increase the value of your property by 4.2%. Poorly run HOAs can leave you screaming into a void. Before you join an HOA, we recommend that you ask a few questions:
Can I see your HOA Binder?
Some HOA binders can rival a Game of Thrones novel in size and are filled with legalese, but they’re also filled with important information so read through them carefully. If you have any questions, your realtor can probably help. These binders should contain:
Are there any restrictions?
Depending on the type of home you're purchasing and where you’re moving, your HOA will likely have some restrictions. You’ll want to learn what these restrictions are before moving forward with a sale. For example, some associations won’t allow pets, or at least certain breeds or sizes. If you have a furry family member, make sure that the association is okay with them - otherwise you’ll have to choose between your pet or your home.
HOA restrictions come in all forms. For instance, some associations might require you to maintain a certain color scheme, may not allow for street parking, or might say no to barbecues or holiday decorations.
Do you allow rentals?
If you’re planning on only living in your home part-time or are looking to AirBnB it or use it as a rental for part of the year, check to make sure it’s okay first. If that was your plan but your HOA restricts it, then you probably don’t want to continue with the sale. It’s better to know now rather than later.
Conversely, if you’re looking to living in your home year round, you might want to know if your neighbors are renting their places out. If renters are using their homes as vacation properties for others to enjoy, this could pose a problem for you. Background checks aren’t usually performed for vacation rentals. Also, people tend to party and get a little messy when they’re on vacation - and we’re not just talking about us.
How much money is in your reserve?
A portion of your HOA fees goes to your association’s reserve fund, which pays for replacements and repairs of community property. Ideally, you want your HOA to be 100% funded - which means that your association can cover all of the anticipated costs from the findings of their reserve study (which is usually conducted every 3-5 years). In reality, most HOAs have a 70% funded reserve. 70% is still a good level to maintain and allows the HOA to fulfill its duties and responsibilities without making many - if any - compromises
How much are dues?
You’re probably going to ask this already, but you should know how much your dues are before joining. In the Puget Sound area, the average monthly assessment owners pay to their associations is around $0.61 per square foot. In Seattle, it’s $0.71 per square foot. That means that if you’re buying a 1,000 square foot condo in Seattle, the monthly cost of your HOA will be around $710. However, every HOA is different, so it’s important to check.
While you’re at it, you should be able to check how much other members of the association are paying. This should be evenly distributed based on square footage.
How often do dues increase?
HOAs usually increase annually and are customarily mapped out 3-5 years in advance. You’ll want to have an idea of by how much they’ll increase so that you can budget accordingly.
What do the dues include?
Every association is different, but here’s a list of what your HOAs may include:
What's the current status of membership dues?
How many units are in the HOA that you’re going to be joining? Also, how many of them are past due, and by how much
What are the membership penalties if an association member can’t pay?
We don’t know what life has in store, and hardships can happen to anyone. If, for whatever reason, you’re unable to pay your HOA dues, you need to know what the consequences are. If you don’t pay, associations typically have the power to put a lien on your house. You’re not going to want that. Instead, see if they offer payment plans in the case of an emergency.
Are there any special assessments?
A special assessment is a one-time fee to pay for something - usually a major remodel or repair of some kind. You’ll want to know if there have been special assessments in the past, if there are currently, and if there’s a possibility for upcoming assessments. If you’re about to move into a home that’s about to get hit with a $20,000 assessment per unit for a roof renovation, you’ll want to know about it.
Can I read the meeting minutes?
Reading the minutes of previous HOA meetings will give you a taste of what the community is like and how your HOA meetings are run. These can be very telling. For instance, if there are a lot of complaints, there’s probably a good reason. If your board is very knowledgeable about the association and everything that’s coming up, it’ll be reflected in the minutes. The meeting minutes should also tell you want maintenance issues are common, if there are any pending lawsuits, and other issues that you might not have initially thought of.
Getting the answers to these questions will help you determine whether or not this homeowner’s association is right for you. If it is - great! If it’s not, it’s better than you know before purchasing your home.
Anthony Greer specializes in content writing and brand messaging development for service-based businesses. www.anthony-greer.com