Before Buying In An HOA: Educate Yourself and Ask Questions
For anyone who has gone through the process of searching for a new home, you have probably experienced the exhilaration of finally finding the perfect home! If your perfect home is located in a homeowners’ association (“HOA”), do your homework, ask some important questions and be honest with yourself before signing on the dotted line. Here are some suggestions:
- Obtain a copy of the governing documents of the HOA prior to closing. In particular, you should review the Declaration of Covenants, Conditions and Restrictions, Rules and Regulations and Architectural Guidelines for the HOA. Carefully look at the use restrictions. Can you live with the use restrictions? Be honest with yourself on this. If you cannot live with the restrictions – do not buy the home. If you think you can ignore the use restrictions and do what you like – think again. Directors of HOAs have the legal duty to enforce the governing documents of the association. Failure to comply with them could lead to fines and even court action.
- Find out the amount of the current assessments and determine whether you can afford to pay them. If you cannot afford the assessments – you cannot afford to live in the community. You need to understand that the HOA has many options available for collecting delinquent assessments. The HOA could obtain a personal judgment against you, a lien could be placed on your home and the association might even have the option of foreclosing on your home. As a result, it’s essential to be honest with yourself on whether you can afford the current assessments and any future increases.
- If you are planning on using your new home as a base for a home business, review the governing documents to determine whether this is permitted. It’s not unusual for governing documents to regulate home businesses.
- If you are planning to utilize your purchase as rental property, it’s essential to examine the governing documents for rental restrictions. These restrictions may range from an outright ban on rentals to caps on the total number of rentals that will be permitted in the community. Assuming that rentals are permitted, you must be prepared to ensure your tenants comply with the governing documents.
- If you have pets who you consider to be members of your family, before buying please review the governing documents to ensure the HOA permits pets and you won’t run into issues relating to your furry family members.
I’ve gotta tell you – I live in an HOA and love it! However, we reviewed the governing documents and knew what to expect before we purchased. Our community is beautifully maintained and the governing documents are enforced. There is also a real sense of community and our dogs are happy too!
For more information on what you should consider before purchasing in an HOA, check out Community Matters: What You Should Know Before You Buy. This is a great publication created by Community Associations Institute.