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Home Owners Associations, the good the bad and the UGLY!

By
Real Estate Agent with Century 21 The Real Estate Centre

 

There is a varying opinion on the usefulness and necessity of home owners associations (HOA’s). It’s important as a buyer or seller to understand why HOA’s are formed and what the benefits and drawbacks are and what you can do to make sure you protect your biggest asset (your home)!

 

The Good:
The basic reasons for an HOA to be formed is to maintain property values by expecting a certain conformity of houses with in a specific neighborhood. Also the association conserves the common areas with scheduled mowing, tree trimming and other basic maintenance to ensure a consistent appearance. The rules and regulations are agreed upon by a board of owners within the neighborhood which all owners have a right to participate in. One of the main benefits is in limiting the use of certain exterior paint colors or changes to a neighboring house negatively impacting the value of homes around it. So when you purchase a house that is in a neighborhood governed by an HOA you probably don’t have to worry about the neighbor painting their house bright pink. When an owner violates one of the rules in the association you can bet a fine will be in their future. In fact in virtually every case the HOA does have the authority to put a lien*on your property when you do not follow the rules or fail to pay any fees imposed. There are many factors that can cause property values to go down and your neighbors are able to negatively impact your chance of selling for the best possible price. Often local ordinances do not cover all the things a neighbor can and can’t do. So in a way the HOA is like an insurance policy insuring that your neighbors don’t disturb the value of your asset by allowing or causing their asset to deteriorate or depreciate.

 

Homeowners Associations typically cover:

 

                Exterior paint and covering changes (owners choose from options or must have color/material cleared with board)

 

                Size and design of decks, railings and porches

 

                Removal of established trees or landscaping

 

                Length of time seasonal decorations can remain up

 

                Removal of household trash

 

                Size, design and type of addition to an existing home

 

                Parking of cars, boats and other vehicles (usually limited to passenger cars only)

 

                Unlicensed or vehicles undergoing repair (typically not allowed)

 

                Exterior maintenance (chipping, peeling paint, missing handrails, damage)

 

                Exterior lawn and landscaping (properly trimmed, mowed and not overgrown)

 

                Sound restrictions (construction before or after a certain time of day, rowdy parties after hours)

 

It’s important to note that every HOA is different and may cover far more or less than the typical. If you decide that you would benefit from living in a neighborhood with an HOA it is extremely important that you fully understand what is expected of you as an owner. In most cases when you purchase a home that is governed by an HOA you are required to follow all the rules and regulations whether you agree with all of them or not. Anything that was previously put into place prior to you purchasing the house you will be expected to follow. Many people want to live in certain neighborhoods and if you want to live in a neighborhood with an HOA you have to follow the rules. If you don’t like the rules your choice is to pick another area or neighborhood. You should never assume you can change things in order to do whatever you like. When you buy a house with an HOA you are accepting their right to impose terms on you and your property. As an owner you will have the right to be on the board and to be a part of voting on any new topics, proposals or board members.

 

The Bad:
You will be expected to follow all the guidelines whether you participated or not. Fees are not very well regulated and the HOA board decides what your fee will be, when it will be due and if, when, and how much it may need to be raised. Like most things HOA fees don’t typically go down, they go up. If you don’t inform the board of changes made to the exterior of your house you may be forced to remove them and it will be at your own expense. If you don’t pay, dues, fines or any special assessments the Association usually has the right to foreclose on your house. Yes, you have agreed to follow the HOA just by buying the home and they can put you out, if you decide to avoid your responsibility. If you love a neighborhood but dislike the HOA, you just have to deal with it or you should look at other neighborhoods. When you sell your house you will be required to provide the HOA documents to the new buyer. Getting a copy of the documents and any other required paperwork is going to cost you. This paperwork could easily cost you a few hundred dollars. In Maryland I have seen them range from about $150.00-to over $400.00 to get a resale package from the association. Sometimes even if you were smart enough to keep your original copies you may still be required to pay the entire or a partial fee.  The only thing limiting your neighbors from exterior changes and condition requirements are the local laws and ordinances. So if they decide to paint their house with their favorite team colors you have no legal recourse to make them change it to something more neutral (no matter how much you may hate that team).

 

The UGLY:
You found a house you absolutely love, put in an offer and it’s accepted! You love the neighborhood and have gotten all your inspections completed and are ready to buy. But wait, when you are just a day from settlement you find out there is a move in fee…. Move in fee???? Oh yes, the latest craze in home owners association charges are move in and move out fees. The worst part of it is you usually find out about it at the last minute. Since it’s a more recent trend for these charges to be imposed there is a good chance the seller didn’t know since they weren’t charged when they bought the place. Not everyone has the time or wants to go to all the HOA meetings and vote on all board proposals. So chances are you’ll be paying that charge unless of course you decide not to buy the house.

 

We all have personal and professional obligations and fitting in board meetings to your already tight schedule can seem impossible. If you can’t make it to meetings and want to know what the neighborhood is up to, I suggest you make friends with a like minded attending neighbor so you can get an idea of the latest agenda. Being informed and active in the dealings of your neighborhood is the best way to be aware of changes and proposed changes that could cost you more monthly or at other times. These move in and move out fees do nothing for the integrity of the neighborhood, I see no benefit to a buyer or seller in paying a fee to move. The only thing this sort of expense does is increase the amount of funds in the HOA’s account. These new types of charges go beyond what I believe is acceptable for an HOA to regulate. Since local governments in many areas do little to limit the power of HOA’s, they can expand their power easily when unopposed by other owners.

 

There is no really good system for finding Home Owners Association information here in Maryland. This makes HOA due diligence prior to a new home purchase tough for the buyer.  So very often these charges and some of the less common regulations come as a surprise and at the last minute. Too often buyers and sellers are surprised by costs and with the pressure from agents and the excitement of the transaction it either gets paid or the sale is lost. No one feels good about canceling something at the final second because of a few hundred dollars so the associations hold the home sale hostage until they get it.

 

Decide whether an HOA is right for you before you buy.
Your Realtor can help you decide if living in an HOA is right for you based on your needs and expectations. You know best what your goals and expectations are so don’t hesitate to express them.  The final decision is always yours and understanding the benefits and drawbacks is the best way to make a good decision.

 

 

 

*Lien-A legal recorded document securing a debt owed by an owner of Real Property that is enforced by not allowing transfer of the property without satisfying the debt owed by owner. Or more simply put all liens must be paid off prior to selling or transferring the house. As an example: A mortgage, tax bill and unpaid HOA fees can all appear as liens against a property.

 

Show All Comments Sort:
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Julaine,  Interesting review of the role played by home owner associations.  "... is you usually find out about it at the last minute."  seems to be a shortcoming on the part of the agent.  More and more I  find the association bylaws posted on line for review by interested parties.

Dec 29, 2011 04:29 AM
Julaine Weincek
Century 21 The Real Estate Centre - Bel Air, MD

I do agree, they have been posting the bylaws online more and more every day. I have found a number of them have facebook pages now where community specific info is updated. For some reason my home state of Maryland seems to want to keep HOA's a secret. Sometimes even finding someone to contact can be difficult. I hope that more exposure regarding this issue will improve the access to this important information. Thanks so much for your comment!

Dec 29, 2011 04:44 AM