Over the years I have financed a lot of houses for property buyers where there has been a Homeowners Association (HOA) You can find various kinds of HOAs- Single Family Homes and Condo or Townhouse HOAs
This article pertains to single family houses.
HOAs are typically formed by the builder/developer to set forth the
expectations for the neighborhood. My last buyers bought in a neighborhood with an HOA and these had been some of the restrictions: "no sheds, no bird raising... chickens, pigeons, doves; no RVs, boats, inside the driveway overnight or parked on the street overnight. Permission was needed for exterior projects and flower plantings, no over head antennas no signs other than for sale signs."
There are provisions in place if the HOA wants to make adjustments. If for instance, there was an indication that a lot of owners wanted to raise chickens, there would need to be an agreement from a minimum of, 70% of the homeowners.
The HOA also has the right to place a lien on every residence when our annual dues aren't paid.
Several HOAs can and will sue a homeowner that does not comply with the rules and regulations, therefore, it's Very Important that buyers make their contract contingent upon the review of the HOA documents together with the existing financial statement and budget. Some buyers might ask why a monetary statement is important to review. It's important to ensure that you'll be able to see what the balance is within the reserve fund and how the money has been spent. You'll also want to know how many homeowners are in arrears on the HOA Payments or if there are any active law suits.
Don't let Home Owners Associations intimidate you... they are an excellent means of keeping the community looking good and property values constant. For questions on real estate financing please e mail me at ipierson@teamvitek.com or visiting my website...
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