How To Buy A Home In An HOA

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HOA Home Buying Guide

The popularity of living in a Homeowner’s Association (HOA) has been on the rise all over the United States. The reasons are many. For some, it’s the protected property values. For others, the conveniences and amenities are the main draws. For some residents, it’s a quality-of-life issue.

If you’re not familiar with how HOAs work, what the benefits are, and why you may want to buy into one, we’ve collected all you need to know to make an informed decision.

What is an HOA?

An HOA is a formally created organization that oversees the maintenance of properties and common areas within its participating neighborhood or community. Belonging to an HOA means following certain regulations and paying the regular fees associated with owning a property in that HOA-managed neighborhood.

While the idea of rules and fees may be a turn-off for some, the benefits can include (but not be limited to):

  • General maintenance of the area, including snow removal and landscaping
  • Common areas such as parks and playgrounds
  • Shared amenities such as pools, sports fields, and recreation buildings
  • Maintaining an area’s property values

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What To Look For in an HOA

Each HOA has unique features and qualities. That’s why it’s essential to do some research before settling on any one HOA-run property.

Here are some things to pay particular attention to.

What Is the Community Like?

These are going to be your neighbors, so why not get to know them a little? Attend a community board meeting to get an idea of the kind of people who show up, get involved, and run these meetings. If you are able, visit the neighborhood you’re interested in and talk with some of the people there. Don’t be coy. Tell them you’re interested in buying a home in the neighborhood and listen to what they have to say about living there.

Review Governing Documents

Get a copy of the HOA’s governing documents, so you’re aware of its rules and regulations. In addition, these documents will also outline the HOA’s powers and obligations to you.

Taking some time to review these documents in advance will allow you to make a more informed decision about well you can abide by any restrictions the HOA imposes and what services and protections they provide in return.

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Learn About an HOA’s Assessment Fees

An HOA’s assessment fees can vary in price depending on what the association covers. Assessment fees often cover expenses associated with common spaces such as pools, parks, and fitness centers. By examining the assessment fees in your neighborhood and what they cover, you can get insights into how the HOA manages its operating costs.

Look At the HOA’s Finances

You can request a copy of the HOA’s reserve analysis, which outlines anticipated expenses and current funds. This helps you determine how well the HOA meets its obligations and how well it can weather unexpected events.

Because many mortgage lenders require HOAs to have an adequate cash reserve on hand, you may be required to obtain a copy of the HOA’s finance report before securing a home loan.

Can an HOA Deny a Buyer?

Most HOA’s have a screening process that can deny some buyers based on certain conditions. The most important thing to remember is that the reasons for being turned down for purchasing a home in an HOA community cannot run afoul of the Fair Housing Act. You cannot be denied housing based on race, religion, color, sex, age, disability, familial status, and national origin.

If an HOA denies a buyer, it must fully disclose its screening process in the governing documents and clearly explain its reasons for rejection. Without this documentation, a rejected buyer could look into filing a discrimination lawsuit against the association.

Here are four legal reasons associations could deny a potential buyer:

  1. A violation of a rule listed in the governing documents
  2. A history of violating rules and regulations in the past—particularly within that same community
  3. Misrepresenting or falsifying information on the buyer application
  4. If the prospective buyer has been convicted of a felony for violent crimes or crimes involving property, and their civil rights have not been restored.

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Best Perks of HOA?

So what do you get out of an HOA? Here are some of the best reasons to consider an HOA.

  • Maintaining High Property Values – After investing a lot of money into a home, you want to make sure it retains its value or possibly increases in value. An HOA will help maintain specific standards in the neighborhood to ensure area property values are stable and as best as they can be.
  • Community Amenities – Many homeowners associations offer a wide range of amenities and extras for members to enjoy, including community pools, tennis courts, gyms or fitness centers, clubhouses, parks, and playgrounds.
  • Many Utility Fees Are Included – Owning a home comes with a lot of bills for services to keep track of. Many HOAs include commonly-used services such as water, gas, trash, sewer, and recycling — as part of the monthly dues. This means less for you to have to manage.
  • Landscaping Is Covered – Most HOAs also cover landscaping services in their monthly fees. This means less work for you outdoors when the weather is nice. You could spend that time in something more enjoyable. HOA’s will also use professional landscapers to keep common areas neat and safe to use.

Get Involved After You Buy

An HOA can provide many benefits to you and your new home, but you can make your HOA community even better by getting involved yourself.

There are often opportunities to serve on an HOA board or committee, which will allow you input in how the HOA operates and how it may provide additional benefits for your neighborhood and fellow homeowners.

HOAs bring value to a community that makes things like fees and getting involved all worth it. You can enjoy a higher quality of life and be secure in knowing your property’s value is protected for the future.