One of the many factors to consider when trying to buy a home in a condo or development is the homeowners association. HOA's have a big impact on the life of people who live in these areas. Understanding how HOA's operate and how they affect life in a development can help a you decide whether or not you want to purchase a home with an HOA.
What is an HOA?
An HOA is an entity that manages common areas and enforces rules for planned housing developments and condos. The people in the HOA are homeowners in the development. All homeowners in the HOA must pay monthly dues to the association.
These dues are used to maintain the grounds and make improvements. Repairs to the roof and sewer are usually covered by HOA dues. The HOA must maintain a savings in order to make large repairs as they become necessary.
If the HOA does not have enough money for large repairs, this could lead to an special assessment, or an increase in the monthly dues. HOA dues can be anywhere from around $50 to over $1,000 per month, depending on where the HOA is located, maintenance costs and other factors.
What are CC&Rs?
CC&R stands for covenants, conditions and restrictions. CC&Rs are the rules that every homeowner must abide by when living in their home. CC&Rs can place many restrictions on homeowners. Everything from exterior decorations, number and type of pets allowed and type of exterior alterations a homeowner can make may be covered by CC&Rs.
Once a buyer purchases a home with an HOA, they're bound to follow the CC&Rs. For this reason, it's very important to know in advance what the CC&R document states. Home buyers can request a copy of this document either before making an offer or during the escrow process. Wasilla home buyers are given a specific period of time to review CC&Rs during the escrow process. During this review period, the buyer can back out of the contract without losing their deposit. Once the review period has passed, the buyer is locked into the contract or faces a financial penalty for canceling the purchase.
What Else Should Buyers Watch Out For?
HOA's have to manage their money responsibly or the homeowners in the association could suffer the consequences. This means that the dues should be enough to cover realistic expenses for the foreseeable future. Buyers who are concerned can ask to review recent financial reports and minutes from the most recent homeowners association meetings. This is a good way to get a feel for how functional the HOA is and whether or not the HOA is properly managing the property.
All of this should be done within the review period. If you're a home buyer who is not sure what red flags to watch out for and how to decide whether or not an HOA is right for you, work with a real estate professional. Your real estate professional can help you go over the CC&Rs, answer any questions that you might have about the role of HOA's and so on. To find out more, contact a reputable real estate agent today.