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Home Buying and HOAs

Home-Buying and HOAs

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We wish we’d paid more attention to the HOA information before signing on the dotted line, but our pain is your gain.

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Four years ago, my husband and I mistakenly thought buying a condo was a good idea. Since then, we’ve been warned for having the “wrong” furniture on our balcony, paid for two different special assessments to cover the building’s water bill, gone to court over repair costs when a broken pipe in a shared wall flooded our kitchen and watched our monthly homeowners’ association (HOA) fees jump from $216 to $335. We wish we’d paid more attention to the HOA information before signing on the dotted line, but our pain is your gain.
What’s an HOA? It’s a group of property owners that enforce rules for your building (for condo units) or neighborhood (for homeowners) and owners are required to pay dues in order to maintain the common areas. Dues are typically much more expensive for condos because the entire building counts as a “common” area.
Four things you need to know about an HOA before buying:
What are the rules? Every HOA has covenants, conditions and restrictions (CC&Rs). The acronym boils down to one word: rules. CC&Rs can cover anything from quiet hours to picking up dog poop to not painting your door a different color than everyone else’s. Break them and the HOA can fine you (in amounts listed in the CC&Rs). In some cases, HOAs can even foreclose on your home if you don’t pay promptly. If you can’t find a current copy of these rules online, ask your realtor or contact the HOA directly.
Can they raise HOA dues? One of the most important powers of the HOA board is its ability to raise your monthly dues, and the HOA documents detail how that process works. How often and how high the dues can be raised are two important questions to answer to before moving in.
Are their reserves decent? The building needs a new roof? It comes from an HOA reserve fund. Draining the pool? Reserves. A copy of the reserve study will tell you how much money the building has set aside, and how much they’re supposed to have. If the reserve is too low, don’t be surprised if you’re hit by a special assessment to help pay. These can run from less than $100 to several thousand dollars. Beyond this, check their financial history to see how often they ask for these kinds of extra payments from homeowners.
What does their insurance cover? A few years ago, our upstairs neighbor’s pipe burst and flooded our kitchen. You’d think the HOA’s insurance would cover this because it was in the shared wall, but no, it was the neighbor’s responsibility. Eventually we had to take them to small claims court to recoup even a small portion of what it cost to replace our kitchen. Be sure to look at the policy ahead of time.
HOAs aren’t evil. They are in place to maintain the properties, and some are more stringent (and expensive) than others. Read the heck out of those HOA documents ahead of time, and, if possible, get help from someone with experience to help explain what you’re looking at. It’s better to find out if an HOA doesn’t fit with your lifestyle before you move, not after.

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