Buying into an HOA is a Life Style and a Buyers need to know all the nuts and bolts that go into an Association before they decide to buy by reading and understanding the Bylaws of the Owners Association. Becoming acquainted with the expectations of an HOA the hard way, usually means the owner is in violation. Penalties are enforceable. It’s important to understand that Adhering to the Rules & Regulations of an Association is a requirement; not a choice. The purpose of an Association is to maintain their integrity through governances, property values, amenities and maintenance for the Association, including the tangible and intangible aspects of that community. The Association collects property management fees and there are responsibilities for both the Association and the owners of the community.
BYLAWS OF AN OWNERS ASSOCIATION
The Bylaws contains Articles of the Association that are specific to the community. The information pertains to expectations of home ownership and prospective buyers need to know what the rules and guidelines are beforehand. Once the offer is accepted the buyer needs to read, review, and understand all the nuts and bolts of the Association.
The rules and regulations are enforceable, adopted, and amended. Owners are given notices and distribution. There are obligations for the owners which may include notice of a sale, proof of ownership, and registration of mortgagees, special assessment fees, for sale or garage sale signs, types of vehicles, parking, pet and rental restrictions, landscaping and exterior maintenance.
A Buyer who obtains Bylaws that are illegible, incomplete, outdated and hard to understand should proceed with caution. Inheritance of sloppy paperwork by self-managed associations run by volunteers can present problems. Information should be clear, concise and easy to understand. If there are any questions about the HOA or the Management Company, they need to be addressed early on and not at the closing table or after the closing. Buyers have a right to know everything about the Association in advance, for example, special assessment fees and what they mean, trash, parking, etc. Timelines for receiving documentation and receiving answers to questions are extremely important. The bottom line is, the condition of the property and all the pretty staging, décor, and nice things about the property and/or the community are not the only factors to consider when buying into an Association.
FINANCIALS
One of the biggest complaints and misunderstanding with Condominium buyers who want FHA-backed loans is certification. Buyers are now limited to purchasing in an Association that is not approved by the administration because it only lasts for two years before the paperwork has to be resubmitted and approved. For many Associations, the certification process is costly, time consuming and may not even be a viable option if the Association didn’t budget for it which causes delays in closings or possibly no closing. This causes major problems, misunderstandings, strains and stress for all parties engaged in the Real Estate transaction.
Review the Budget for the HOA - know where your money is going and is there sufficient money in the budget?
Does this community collect for education assessment at the time of closing based upon the sales price?
What impact does the Recertification fee have on the Seller and the Buyer?
KNOW THE NUTS & BOLTS
If rentals are allowed, is there a cap? If the fences, roof, siding and exterior all looks brand new, are there Special Assessment Fees that the prospective Buyers need to know, who is responsible for the fees, and can the new buyers afford them? If properties are in disrepair, could there be special assessments fees planned in the future? Are there pet restrictions, such as type, size, and nuisance issues that the buyer needs to know, such as barking? How often do the Board Members meet? Communication – what type of communication is provided to the property owners?
Disclosers for the property conditions, home inspections, loan approval and appraisals are important. Equally important are the HOA Bylaws, Rules and Regulations. Buying a home with an HOA is a life style and choice. Knowing the nuts and bolts and expectations beforehand is something you need to know.
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