Is an HOA Right For You?

Some people love living in an area with a homeowner’s association (HOA); others can’t stand it. Usually, this comes down to not understanding what an HOA is or not understanding HOA management.

If you choose to live in a condo or townhouse, you will also be choosing to deal with a HOA. That’s why it is important to know what an HOA is, what it costs, what it covers, what it requires, and how stable it is.

HOA Fees

Essentially, an HOA is the legal entity that manages shared areas like the roof of a condo, the lawn of a townhouse, and the clubhouse and pool. As a condo or townhouse owner, everything within the walls of your home will be your responsibility. For townhouses, the exterior and yard may also be your responsibility. Of course, you’ll want to look at the HOA agreement to know exactly what is yours and what is not.

In order to manage these areas, the HOA collects monthly, quarterly, or annual dues. The dues you pay will vary, but typically go up as shared spaces and amenities increase. Keep in mind that when you move a unit with an HOA, you have the obligation to join and pay the dues.

In addition to dues, you may also be charged with an assessment. Assessments are used for major renovations and repairs that cannot be covered by the usual HOA funds. Renovations might be due to age (like needing a new roof), natural disaster (fixing earthquake damage), or new amenities desired by residents (like the addition of a tennis court or infinity pool).

One thing to keep in mind when buying a condo is that you can plan for dues because the cost is known upfront. However, assessments can happen at any time and cost several thousand dollars.

Rules and Regs

HOAs also create rules, also known as covenants, conditions, and restrictions (CC&R) that residents must abide by. Depending upon the HOA and the type of residence, HOA rules can include such things as:

• Whether you can have a satellite dish
• Size and type of pets you may have
• Whether the building is smoke-free
• What type of landscaping you may do
• Window coverings for windows facing the street

To be content in your new condo, you’ll want to be sure that you can abide by the CC&R.

Things to Consider

Before deciding to buy a condo with an HOA, you should do your homework. Here are some things you need to do before buying.

• Know the rules: Be sure that you understand the rules and understand the penalties for not following the rules.
• Check for compliance: Be sure the unit you want to buy is currently in compliance with the rules.
• Check the fees: Find out what the current fees are and what they have been over the past 10 years. This will help you see how stable the fees are. Finally, ask how they determine how and when to raise the fees.
• Check out the reserve fund: If the fund is too small, assessments from homeowners will be needed to fix large issues. You’ll also want to ask what assessments have been made in the past ten years and what future assessments are planned.
• Check out the amenities: Since you will be paying for the amenities whether you use them or not, check to see if the amenities offered meet your needs.
• Know the type of insurance for liability, fire and other perils that the HOA maintains. One thing to consider is whether they carry an earthquake policy.

As your Realtor, I work to understand the CC&R of the HOA properties in my area, as well as know the good and bad points about different condo and townhouse communities. If you have questions about a condo in the Westside area, please give me a call.