What’s an HOA?
In a nutshell, a Homeowners Association (HOA) governs condos, townhomes, gated communities, or a block of individual homes located in a planned community. If you want to buy a home in an HOA, you are obligated to join and pay the monthly HOA fees, which help maintain the property, the land, and the common areas used by the homeowners.
Can I See the HOA Documents Before I Buy?
There may be a document in the HOA binder that sets certain regulations for you and your family to follow. The rules (or covenants, as the HOA refers to them) must be adhered to by all unit owners. They may include regulations about what colors you can paint the exterior of your home, whether you can park an RV in your driveway, what type of pets you can have, or even how often a moving truck can deliver your household goods.
Does the Reserve Fund Have Enough Money?
Part of your HOA fees will be earmarked for a reserve fund, which will go towards the repair or replacement of community property. Usually, this equates to 25% to 40% of your fees. Says the best way to know what amount of reserves is needed is through a Reserve Study, in which professional estimates how much funds are needed. But not all HOAs do that.
Will My Vote Count?
The specific rules of an HOA will dictate how an HOA can raise the fee or charge special assessments. Some votes are put to a majority-win, however, some HOAs use voting by proxy. Proxy voting rules contained in HOA bylaws are especially important because some HOAs allow a small number of individuals to make decisions for all homeowners.
How Often Will My HOA Dues Go Up?
Have a closer look at your HOA dues history. Have they consistently gone up every year? If so, what is the usual percentage of increase? The HOA documents will state if there are any limitations regarding how much the dues can be increased. It may be a specific percentage or dollar amount. Generally, there should be no limit to how much the HOA can raise dues to cover the annual budget. However, some states regulate dues and assessments, or require a majority vote to increase dues.