Are there Home Owner’s Association (HOA) fees listed with the property you want to buy? If so, that means there is a legal body that has the power to require fees on that property. Opinions vary greatly on the utility of such associations, some feel they are too restrictive while others feel they bring needed order to a neighborhood. If you are unsure of how you feel about the presence of an HOA in your potential community, here are 5 tips for doing an HOA assessment to find out if it’s the right fit before you buy.
1. Financial Condition of the Property with the HOA
First of all, request to see to see all the HOA financials on the property before you pay for a home inspection and appraisal fee. Check the Demand Statement for any unpaid HOA dues that could allow the HOA to put a lien on the property or if there any special assessments on the property that will result in a large fee. Also, make sure to take a copy of the HOA’s Master Insurance Policy to your insurance agent and have them determine what is covered under the policy and what isn’t. With the help of your insurance agent, you can make sure you have proper coverage.
2. Physical Condition of the Neighborhood
Safely look at the neighbors’ properties, do they look nicely kept or run down? What do the common property areas look like, are they well maintained or are they looking outdated? A good HOA uses community rules to keep properties looking groomed and this can give you peace of mind and keep your property values up.
3. Know the Declaration of Covenants, Conditions, and Restrictions (CC & R’s)
These are the community rules such as what color you can paint your garage door that can be a deal breaker for some. Don’t wait until it’s too late to find out what the rules stipulate. As your purchase contract reaches ratification ask the escrow agent to order the CC&R documents for your review. Understand what your requirements are when it comes to HOA restrictions so you can feel comfortable in your new home.
4. Do a Financial HOA Assessment
What’s the financial health of the HOA? The Reserve Study will tell you if the HOA has sufficiently funded reserve requirements held for unforeseen emergencies. Take a look at the HOA’s budget and financial statements, do the dues that are collected sufficiently cover maintenance of the common properties of the neighborhood? A sudden emergency that catches the HOA unprepared can result in a sizable fee passed on to you.
5. Determine the Temperament of the HOA
Last but not least, find out who is in charge of the HOA, is it the developer or the homeowners? Look at the HOA board meeting minutes, newsletters and bylaws. Talk to the neighbors about how they feel about the HOA board, angry homeowners can be a major red flag that an HOA is too aggressive or too laid back when enforcing the CC&R’s. This can alert you to avoid getting into a community that is not right for you.
Finding the right homeowners association is an important step in the process of becoming a new home owner. We can help you in this process with agents who will find the right community to fit your lifestyle. Contact us today at Kendall Homes for your new home construction needs and expert advice.