HOA's Are Here to Stay
Tenant 1: "I'm only renting from you (the landlord), not some HOA. I don't want to be bothered by all those other rules too." Tenant 2: "When I rented this place I thought the HOA was some kind of neighborhood social club. Are these things common?"
Owner 1: "I thought I just bought a house. I didn't know that I bought into some persnickety association too?"
Owner 2: "I planted a tree. I was told to remove it. I put up green blinds. I was told to replace them with white ones. Now I'm being fined for installing a red door."
What Is A HOA?
Home Owner Associations (HOA's) have been around for decades, but have become far more common in recent years. It is an organization of home owners, usually set up as a non-profit corporation, designed for and empowered to uphold specific rules within a given subdivision. All property owners, and their tenants, in a particular HOA are required to conform to the agreed upon covenants, conditions, and restrictions (CCR's).
What Are The Benefits of a HOA?
- A well managed HOA maintains the property value of each home.
- It may decrease the potential for crime.
- It may increase the potential for true sense of community.
- Many people prefer and are attracted to a clean, orderly, and safe subdivision.
What Are The Disadvantages Of Belonging To A HOA?
- Owners have less control over the external appearance of their property.
- There are often restrictions on the type of business you can operate from your home.
- There will be monthly dues and often special assessments over and above your mortgage and property tax bills.
- Your tenants may not abide by the rules of the HOA which may result in a fine being sent to you, the owner.
- Some HOA's have lots of very specific rules and instantaneous enforcement.
What Should A HOA Look For When Hiring A Property Management Company?
- One that will bring reputable, licensed management expertise that members of an HOA may not have.
- One that can show that it is up to date with the complexities of property and HOA state and local laws.
- One that is able and willing to inform, disclose, and provide relevant education to HOA board members.
- One that will bring needed objectivity and consistency in the enforcement of HOA rules.
- One that has a good record for and the ability to be proactive and maintain the property up to HOA standards of health and safety.
- One that has access to reliable and reputable vendors, accountants, and legal expertise.
- One which immediately acknowledges requests and then fully responds by appropriate action.
- One that demonstrates real concern for the residents, not merely for a paycheck.
- One that is willing to have their books audited annually by an independent agency.
- One that makes all HOA related documents, minutes from meetings accessible online for all residents
What Should A Buyer/Tenant Look For When Considering A Property In A HOA?
- If you have never lived in a HOA, learn as much as you can about them before taking the plunge.
- Carefully examine the HOA articles of incorporation, current CCRs, Bylaws, and amendments before signing anything.
- Is there an up-to-date, easy-to-read and understand interpretation of the CCR legalese made available to all residents?
- How open is the HOA to questions? How quickly and thoroughly do they answer your questions?
- Are essential disclosures easy to access?
- Read through the most recent minutes of the HOA board meetings.
- Are the HOA rules conducive to your particular lifestyle?
- What does the HOA regulate?
- Who is their Property Management Company? What are their responsibilities? Who are their vendors?
- How well does the PM keep up the landscaping and various amenities?
- As you walk the premises is it generally appear safe and clean?
- How well maintained are the buildings? What is the procedure for requesting maintenance?
- What is the amount of the monthly maintenance fee?
- If an owner, is there a maximum amount that the monthly dues can be increased each year?
- Is a special assessment imminent? How can it be paid? Is there a limit to the amount and frequency of an assessment?
- What projects has the HOA already planned for in the near future?
- What are your options if you believe you are being mistreated by the HOA? (Harassment, Discrimination, poorly done maintenance/repairs)
- Does the HOA maintain an adequate reserve fund over and above its operating funds? Take a look at their budget.
- Are there any legal judgments against the HOA or its property management company?
- How often does the HOA meet? What is considered a quorum? Who are the board members? How can they be contacted?
- What kind of liability insurance does the HOA have?
- What is the ratio of owners to tenants? What happens if the latter is greater than the former?
- Is there a disaster plan? What if there is a flood, tornado, or fire? How quickly do firefighters and the police arrive?
- Is there a neighborhood watch organized? Who leads it? How does it operate? What are the contact numbers?
What Are Some Of The Most Common Items Regulated By A HOA?
- Pets - size, number, type, acceptability, bee hives, etc
- Plants - adding trees, bushes, flowers. Dealing with weeds.
- Lawns - watering frequency, irrigation, maintaining, height allowed
- Pool - use, number of guests, beverages allowed
- Parking - where, number of vehicles, type of vehicles, guests parking, RV's
- Window - the color of blinds, curtains - as seen from the outside
- Patio - what can and cannot be seen by neighbors, such as a clothesline, toys, garbage cans, composting, bikes, storage
- Fences - acceptable, type, color, height, hedges
- Exterior - color of paint, shingles, shutters
- Doors - color, type, storm doors
- Garages - leaving door open
- Trash - location of, recycling, what is permissible to place in a community trash container
- TV - add a satellite dish, antenna, ham radio tower
- Decorations - what can be set up outside the home during various holidays
- Home Business - childcare,
- Equipment - basketball hoops, tennis nets, swings, tree houses
- Signs - are political, religious, graduation, and/or holiday signs allowable? US flag?
- Noise - parties and music time limit,
- Curfew - is there a curfew for minors?
- Leasing - does your HOA require your home to be only owner-occupied?
- Carpets - if you live above another unit, your HOA may require carpeted floors to dampen noise.
What we've included above isn't exhaustive, but is an attempt to provide a useful overview of the topic. As always, if you need legal advice, ask an attorney with expertise in that area. We hope that the above information wets your appetite to learn more about HOAs and maybe even helps you to avoid making a bad choice on where to purchase or rent a home.