What is an HOA? | Answering Common Questions About HOAs

Did you know that about 1 in every 5 US homes belong to an HOA? If you’re thinking about buying a new home that is part of an HOA, read on to find out everything you need to know.


What is an HOA?

The term HOA is short for Homeowner Association. It’s a legal entity usually set up by the communiity home builder. HOAs collect fees to maintain community amenities and common areas shared by all the homes. Additionally, HOAs outline the rules of the community in a Declaration of Covenants, Conditions, and Restrictions (CC&Rs).


What do HOA fees cover?

Typically, HOA fees cover the maintenance for any common areas and amenities like tennis courts, golf courses, and swimming pools. Every homeowner association is different, so it’s essential to get the specific information in writing for whatever community you’re interested in so you know what your fees cover. If you are exploring a new home with Pulte, an easy way to do that is to reach out to the New Home Specialist for the community by calling the number provided on the site, starting a chat, or filling out a Request Info form.

If you’re looking to buy a townhome or condominium, versus a detached home, there’s a good chance your exterior maintenance costs are covered by the dues. For example, if the building needs a new roof or paint job, it should be paid by money collected. Many homeowners like having an HOA because they don’t want to hassle with exterior maintenance, but they want everything to look it’s best. They’d rather pay a monthly fee and have the association handle it for them.


What are the benefits of an HOA?

HOAs offer many benefits, the most obvious being that maintaining the common property protects home values and quality of life within the community. It’s the association that makes sure the neighborhoods stay well-kept and looking its best. There’s also the advantage of consistency of design. Just drive through a community governed by an active HOA, and you’ll notice homes are in good repair with similar exterior paint colors, no junky cars or large unsightly RVs in the driveway, and no falling down fences. One of the other benefits of an HOA is the sense of community homeowners enjoy. From growing families with children to active retirees, associations help create a beautiful environment to live in.


Are HOA fees mandatory?

Most HOA fees are mandatory. Occasionally, you might find an communities that offer the option to pay a small fee access to amenities, like a neighborhood pool, but in this scenario, the neighborhood might not be as well-kept as communities with a more active association and mandatory fees.

When purchasing in a planned development, read the CC&Rs to find out if the fees are mandatory and what can happen if you don’t pay them. Any mandatory fees should be added into your budget when deciding if a property is affordable for you.


Can HOA fees go up?

Yes, they can, and before you purchase a property, it’s essential to find out the history of the fees and when they’ve been raised and how often.

The other thing you want to ask about is past, present and future one-time assessments. Property owners can be assessed a fee for unplanned expenses such as new roofs or parking lot repairs. It’s a red flag if property owners are being assessed too often and can be an indication that the association isn’t handling the finances well. Nolo press has a very informative article called: When HOA Associations Can Impose Special Assessments that can help you better understand when an HOA might impose these extra costs.


Do HOA fees ever go down?

The short answer is no. Since regular maintenance, insurance, labor, sewer costs typically increase each year the fees probably will too. To be able to predict what your costs might do in the future, ask to see the past five years of records. That will give you a good idea what to expect going forward.

When you apply for your mortgage, make sure you have an accurate estimate of your HOA fees. You’ll need to have a precise idea of what your house payment will be.


Can you negotiate HOA fees?

That’s a good question with a surprising answer. If you can negotiate the fees, don’t buy the property. You want the HOA fees to be collected like clockwork so that the community is maintained. If some owners cut a deal for lower costs, that means others are paying more than their share–not a good thing.


Do renters pay HOA?

Ultimately it is the homeowner’s responsibility to pay the homeowner dues; although, the property owner does have the option of passing on this cost to their renter if they choose. Savvy landlords know to put a clause in their rental contract that the tenant pays for any fines from violations of the CC&Rs. If you’re considering purchasing with the intent to make the home a rental, double check to make sure there are no rules against leasing out the property.


Do you pay HOA fees monthly or yearly?

In most cases, townhomes and condominiums owners pay their dues monthly, and single-family homeowners pay their dues annually or semi-annually. This varies from place to place so it’s important to ask. Because these fees make a difference in your payment, it’s important to know what the costs are and when they are due. Once in a while if an HOA is providing monthly landscaping, they may charge monthly.


Now that you know all about HOAs, its time to go out and find your next new home community!


Contributed to Your Home blog by Carol Youmans

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Published 3.13.19

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