Home buying 101: What is the purpose of a Homeowners Association?
Homeowners Association (HOA) Explained
When you are looking at purchasing a townhouse or a condominium, you’ll oftentimes hear the term “association” or “homeowners association” or may some other derogatory names. No matter what they are called, I’ll be using the term HOA to refer to the Homeowners Association.
Many people, when they consider purchasing their first home, want to consider a condominium or a townhouse as an entrance to home ownership. This may be because they don’t want all the responsibility of owning a home right off the bat. They may want to have some flexibility in taking off on a 2 week trip without worrying about replacing the roof. Whatever the reason, there are several benefits to owning an Association Maintained property.
But before you buy a condo or townhouse, you should know what a HOA is, what they are responsible for, and how they will affect your unit.
Definition
The Homeowners Association is an entity that consists of the owner members whom elect a Board of Directors (BOD) to run the Association. The HOA upholds the Rules And Regulations that were passed by the BOD. They exist to ensure the smooth continuation of the Association, and the betterment of the owner-members.
What the HOA is responsible for
Besides upholding the Rules and Regulations, the HOA also maintains the property and amenities. There is a slight difference between Condos and Townhouses in the fact that with Condos, you usually have common spaces and other amenities. That’s not to say that you can’t have those things with Townhouses, but less likely so.
The HOA also maintains, repairs, and replaces aging infrastructure. This is usually done through a reserve fund and/or special assessments. Items of this nature include: roof replacement, heating plant replacement, driveway / concrete upkeep or replacement, siding, decks, swimming pools, tennis courts, common space carpeting and painting, etc. All of this is controlled and maintained by the HOA.
How it will affect YOUR UNIT
Part of the HOA is regulating how your unit looks and how you can function in it. For the inside, the HOA usually regulates making changes to your unit that involve changing any of the walls or plumbing. They also may have rules that spell out pet policies. Or maybe visitor policies.
The exterior appearance is also regulated by the HOA. This would include paint color, finishes, door styles, window styles.
Pros
The HOA can enforce architectural standards so that each unit looks uniform. This can be a great thing when you go to sell in the fact that other units most likely won’t drag down the value of your unit.
They can also enforce other rules such a limited number of pets, rental restrictions, parking regulations, etc. Many HOAs have restrictions on motor home parking, or boats and trailer parking. These all go toward helping your unit maintaining its value while keeping peace with the neighbors.
The HOA maintains the lawns and the snow shoveling. This can give you peace of mind when taking a 3 week trip to Florida in the middle of December.
The HOA maintains the reserve fund so that you don’t have to worry about major repair expenses. They have done the reserve study and will hopefully be collecting enough to fund these maintenance and repair items.
Cons
There are negatives with association living as well. Some people will feel like the HOA is too controlling with things like where guests can park, or not being able to have a family that drives an RV park in the driveway, or dictating how you can decorate or paint, or even little things like lawn ornaments.
Another negative is that you basically have neighbors above, below, and next to you. In condo buildings, it is very common to have neighbors on a few sides and above or below you, depending on the size of the building. While with townhouses, it is common to have a side neighbor or two. These neighbors are in close proximity and could be noisy, or coming and going in the middle of the night with doors slamming, etc.
One other negative is if there is mismanagement of the association. This could take the form of fiscal mismanagement. You are also dependent on whether other owner-members will fight increasing dues that would properly fund the reserves.
Is an Association Property right for you?
It is important to get the right answers before you own an Association Property. Are you willing to put up with the negatives to enjoy the positives? Only you can answer that. Armed with the right questions, you alone can figure out whether you should buy an Association Property or not.
Additional Resources:
Reserve Funds and what it means to a complex