7 Essential Questions You Should Ask an HOA Before Buying

There's a lot more than to living in a Homeowners Association than paying dues for civilities and landscaping. Here are seven essential questions you should ask before moving into an area with an HOA.

1. What's an HOA?

In a nutshell, a Homeowners Association (HOA) governs condos, townhomes, gated communities, or a neighborhood of individual homes in a planned community. If you want to purchase a abode in an HOA, y'all are obligated to join and pay the monthly HOA fees, which help maintain the property, the country, and the common areas used by the homeowners. HOA fees vary from as lilliputian as a few hundred dollars a month to thousands per calendar month, depending on the size of the domicile, location, and civilities.

two. Can I Come across the HOA Documents Before I Purchase?

The sheer size of the HOA binder may exist daunting, simply don't let that deter you.
"HOAs are the financial backbone of the building. It's and then important buyers take a magnifying glass to the HOA documents," says Kim Howard, Realtor, and Co-Founder of Howard Homes Chicago. The documents will include the covenants, conditions and restrictions, bylaws, and full general HOA rules and regulations.

3. How Do I Feel Near Rules?

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I of the documents in the HOA folder may affect your personal gustation or lifestyle. The rules (or covenants, every bit the HOA refers to them) must be followed by all unit owners. They may include regulations such as what colors you can paint the outside of your home, whether you tin park an RV in your driveway, what blazon of pets y'all tin can have, or even the days a moving truck can deliver your household appurtenances.

HOA covenants aren't designed to be buzzkills. They're designed to go on the community looking it's all-time, and to help maintain holding values. But the covenants are definitely a serious factor to consider if y'all like doing things your own way.

4. Does the Reserve Fund Accept Enough Coin?

Part of your HOA fees volition be earmarked for a reserve fund, which will go towards the replacement or repair of community belongings. Usually, this equates to 25% to forty% of your dues. Howard says the best way to know how much savings should be in the reserves is through a Reserve Study, in which a professional estimates the amount of reserves needed. But non all HOAs exercise that.

"Usually, information technology'south good to take a reserve fund balance of effectually lxxx% of what 100% of costs for building projects would be if everything went wrong at once, and you had to have coin to fund these projects," says Howard.

v. Will My Vote Count?

Permit's say the HOA decides to seek loans for outside grounds upgrades, which could mean college HOA fees for you. Will you get to vote, or will proxy voting exist used?

"The bylaws of an HOA dictate how an HOA can increase dues or levy special assessments. Some votes are put to a bulk-win, however, some HOAs use voting by proxy. Proxy voting rules independent in HOA bylaws are particularly important because some HOAs give the ability for a small number of individuals to brand a decision for all homeowners," says Christopher Stjernholm, Director of People and Managing Banker at TRELORA.

vi. Tin I Read the Minutes?

To get a sense of the climate in the community and how the HOA meetings go, inquire to attend a meeting and/or request a copy of the minutes from the last half-dozen months.

"This can provide insight into how other owners are feeling and what's really going on in the building," says Howard. For example, how are the complaints addressed? Are there lawsuits pending? Are there a lot of unhappy unit owners complaining about maintenance or other bug? If there seems to be a lot of discord, it may non exist the abode sweetness home you're looking for.

7. How Often Volition My HOA Dues Go Up?

Take a closer expect at the HOA ante history. Has information technology consistently gone up every year? What is the usual percentage of increment? The HOA documents will land if there are any limits on how much the dues can be increased. It may be a specific percent or dollar amount. Generally, there is no limit to how much the HOA can enhance dues to meet the annual budget. Even so, some states regulate ante and assessments, or require a bulk vote to increase ante. It'due south prudent to do your due diligence or ask an attorney.

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Source: https://www.mymove.com/buying-selling/guides/hoa-questions/

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