Buying in an HOA Community


By: Ken Reetz

Home Owner Associations are formed to preserve the value of a community. The intent is to keep all properties true to the original design concept and properly maintained on the exterior. This includes landscaping.

In addition, the HOA will have rules and restrictions that promote “good neighbor” policy; rules that affect parking, excess clutter, noise, and so on. There are usually forty to fifty pages of regulations and policy to explain what is expected.

The HOA has legal authority to impose a fine when an owner disregards the rules, and finally may lien a property when an owner fails to pay fees or fines. With this in mind, it is important for all property Buyers to review carefully the CC&Rs (Covenants, Conditions & Restrictions) when considering a purchase into a community that is governed by an HOA. Go steps further by reviewing the Meeting Minutes, Financials, and anything else that will help you know the community better.

It takes time to perform due diligence, but you want to know if there are: Special Assessments, Legal Issues, Deferred Maintenance, and/or other conflicts that might affect your enjoyment of this community.

How well the HOA is managed will affect more than property value; if things go too far awry you may find it nearly impossible to sell your home in the future. An interested buyer may not be able to get financing if the community has issues with:
• Low cash reserves
• High percentage of delinquent association fees.
• Inadequate insurance coverage.
• Too many rentals.

There is a temptation to relax due diligence when the address has a higher prestige; resist doing so because serious issues can lurk anywhere. I’ve seen it firsthand more than a few times. Aside from that, even the best run and highest regarded HOA community will have CC&Rs – there may be some restrictions or limits that you just don’t want to live with.

Any benefits of the HOA depend upon matching your expectations so it should have the same scrutiny as the Home Inspection or the financing – all having long term implications.

If you want to talk about anything real estate I would be happy to have that conversation with you. Relax – there is not the slightest obligation.