You found the perfect home—spacious, ideal for your growing family, located in a beautiful neighborhood… and under the governance of a homeowners’ association (HOA). Is that good or bad? What will that cost you? Should you pass on the property or snap it off the market?
This is a familiar conundrum for many buyers who encounter HOAs for the first time during their home search and aren’t sure what buying a property in an HOA-governed area entails. In this article, Reeco, the sustainable real estate brokerage, will walk you through:
- What an HOA is
- An explanation of typical HOA fees
- Pros and cons of HOAs
- What to expect when living in an HOA-regulated community
- How to become involved in an HOA if desired
- The questions that you and your real estate agent should ask before buying a home within an HOA
- What you need to know about adding a complimentary solar power system—free to all home buyers and sellers who work with Reeco—to your home while abiding by HOA rules
Should you have any questions about HOAs, you can reach a Reeco real estate agent immediately at 877-967-3326 or firstname.lastname@example.org. Now let’s dive into the world of homeowners’ associations and answer some of the most frequently asked HOA questions!
An HOA is a legal body that governs a community, such as a townhouse complex or gated community of homes. Developers typically create HOAs when building these communities in order to transfer management of the community to homeowners after selling a certain number of properties.
In general, HOAs establish and enforce community bylaws, maintain common areas, and provide community amenities. Community bylaws are referred to as covenants, conditions, and restrictions (CC&Rs), and are meant to protect property values for all homeowners in the community and ensure a high quality of life. CC&Rs could include things like:
- Requiring residents to paint their front doors a specified color
- Restricting the types of vehicles that homeowners can park on streets or in driveways
- Requiring lawns and home façades to be maintained to a certain standard
Community amenities and common areas could encompass:
- Swimming pools
- Tennis courts
- Parking garages
- Security gates
Homeowners pay to maintain these amenities through monthly dues, which typically range between $200 and $600 per month. Most of these fees go toward general maintenance and day-to-day expenses, such as operating expenses, utilities, and staff salaries (though HOA dues don’t necessarily cover all amenities, such as garbage services—homeowners may need to pay for those separately, out of pocket). Occasionally, homeowners’ dues will go toward unexpected repairs or infrequent projects such as repainting the clubhouse.
Fees are determined by the HOA board and while some are determined by a vote among homeowners in the community, not all are up for discussion. Still, all homeowners must pay their fees no matter whether they agree with the budget or utilize all facilities.
To get a sense for the cost of HOA dues in your potential housing community, as well as what these dues cover, ask for a printed history of HOA dues throughout the past five to ten years. You may also want to request:
- A list of special assessments that have been made in the past to ascertain how often large or unexpected projects have come up
- An explanation of the process used to determine HOA fee increases
- A schedule of HOA meetings to see if your schedule permits attendance, in case you are interested in going
- An overview of fines and penalties for CC&R violations (it’s best to grab a complete copy of the CC&Rs if possible)
Questions to Ask Before Buying a Home Within an HOA
Reeco real estate agents are trained to ask the right questions when helping clients who are considering purchasing a home in an HOA community. Some examples of questions to ask before you buy a home include:
- Is the HOA managed by residents or a professional outside firm?
- How much are the fees and how often are they due? Have fees increased over time?
- Does the HOA have a reserve fund to handle emergencies or unexpected expenses? If so, what is the current value? (A larger reserve can mean smaller out-of-pocket costs for you and your neighboring homeowners when unexpected projects arise.)
- Are there any big capital expenditures planned for the near future?
- What amenities are offered and managed by the HOA?
- What type of insurance does the HOA carry?
- Are there any pending lawsuits involving the HOA?
- Is there an established process for resolving conflicts between homeowners?
- Are there any outstanding citations or HOA liens for the home I want to buy?
- Can I lease the home to a tenant or make it available for vacation rental?
- Which components of the house, if any, are the HOA responsible for maintaining and repairing (i.e. roof, paint, exterior doors)?
- Can I attend a meeting or obtain a copy of the most recent meeting minutes?
How to Participate in an HOA
In addition to simply attending meetings and voting, all homeowners over 18 can also seek election to the HOA’s Board of Directors, particularly if they are interested in changing the CC&Rs or ensuring that the HOA’s budget is well spent. Typical Board positions are:
- Vice President
Elections are generally held every year, with each homeowner casting a vote for each home they own in the community (one home = one vote). You are free to nominate yourself to the ballot and try to gather votes from your fellow homeowners! Just keep in mind that board members generally aren’t compensated despite the sometimes busy workload.
For many people, though, the work is worth it in order to gain more influence in their community’s management. This could include serious matters such as changing CC&Rs to less pressing matters such as swapping outdated tanning beds for a modern gym that benefits the neighborhood.
Pros of Living Under an HOA
HOAs are great for homeowners who want access to prime amenities—such as tennis courts and swimming pools—that they wouldn’t otherwise be able to afford on their own. And because dues go towards the maintenance and repairs of these amenities, you won’t individually be on hook for, say, fixing a broken pool pump or replacing worn out equipment in the gym. Not being responsible for upkeep can be a major perk for many homeowners!
Additionally, CC&Rs are meant to maintain property values and establish a high quality of life—both good things for you while living in the community, as well as potential selling points if/when you decide to put your property on the market.
Cons of HOAs
An HOA may not be for you if you like to have more control over the look and features of your home, such as paint colors, a xeriscaped lawn, or the ability to own several pets. Also, keep in mind that HOAs can—and most likely will—fine you should you break the rules, which could result in a significant cost. Some HOAs can even foreclose on your home for unpaid fines or dues, which is why it is essential to understand the scope of an HOA’s governance before purchasing your condo or home (tip: an experienced Reeco real estate agent can walk you through the process).
What You Need to Know About Adding a Complimentary Solar Power System to Your Home Under HOA Regulations
Because Reeco provides complimentary solar power systems and free electricity to all home buyers and sellers, many of our clients wonder whether they can take advantage of this perk when living in an HOA community. The quick answer: absolutely!
Although they may regulate certain elements of your complimentary solar system such as size or placement, HOAs in California can’t prevent you from installing a solar power system thanks to the California Solar Rights Act. Our Reeco real estate agents and solar installation specialists possess years of experience navigating HOA regulations, ensuring that your home can receive a complimentary solar power system while abiding by CC&Rs.
Best of all, Reeco’s in-house solar installation team handles everything from designing your custom solar power system to installing the panels. We can even install your complimentary solar power system before move-in so you start saving from day one. Orange County clients typically receive $29,000 worth of value when buying their home with Reeco and getting a complimentary solar power system, and save an average of $1,500 every year on their electricity bills!
Is an HOA Right For You?
Like any form of government, HOAs can either be well-run, effective, and efficient, or poorly-run, bureaucratic, and expensive. Overall, living in an HOA-regulated community is a personal choice—one that should be researched carefully with the help of a knowledgeable Reeco real estate agent, who can indicate red flags and guide you toward the right decision.
Reach an agent now to discuss your dream home and learn more about whether an HOA is right for you!
Or, start searching available homes in your ideal neighborhood!