First-Time Homebuyers Guide to HOAs

Community associations—HOAs, condos, co-ops, and mixed-use communities—offer choices, lifestyles, amenities, services, and efficiencies that people value. An estimated 73 million Americans choose to live in 351,000 planned communities. That number continues to grow, according to the Foundation for Community Association Research. 

Many community associations offer services and amenities that most Americans can't afford on their own. Some of these include swimming pools, tennis courts, playgrounds, lakes and ponds, professional security, and golf courses. These communities also provide some degree of protection against neighborhood degradation and deterioration—cars on cinder blocks, dilapidated homes, or not-maintained yards.

But with all of their inherent advantages, community associations occasionally face complicated issues, none more common than the challenge of balancing the community's best interests as a whole with the preferences of individual residents. 

Problems often arise because of unrealistic expectations, misinformation, and misunderstanding. You can help ensure a more positive and fulfilling community experience by learning all you can about a community association before buying a home.

What You Need to Know

Do you have your eyes on a particular home? The first thing you should do is ask your real estate agent if it's part of a community association. If so, try to obtain copies of the governing documents, including the Covenants, Conditions & Restrictions (CC&Rs), and read the information carefully. If you don't understand something, discuss it with your agent or consult an attorney for guidance. Ask your agent how to get these documents. You may have to pay a fee. 

It's essential that you—a prospective buyer—remember that homeowners agree to comply with CC&Rs when they move into an association-governed community. These rules typically apply to assessments, architectural guidelines (such as additions, decks, and paint colors), landscaping, maintenance, satellite dishes, clotheslines, fences, flags, parking, pets, patios, and more. 

You can also talk to people who live in the community. Please find out how they feel, not only about the neighborhood but about how the community is governed and managed. For example, ask the association president, a member of the elected board, or the professional who cares for the community.

Assessments: Your Fair Share

Before buying a home in an association-governed community, you should view the association budget because it sets the level of assessments and services. Collected monthly, quarterly, or annually, reviews are not voluntary. Instead, they are mandatory homeowner dues one must pay, or the association can take legal action, like placing a lien against your property. This action can lead in rare cases to foreclosure. But, more importantly, as a member of that community, you must pay your fair share of the costs.

Determine what the assessment covers and what it doesn't cover. Assessments typically cover expenses for maintenance of common areas, trash collection, snow removal, private streets, recreational facilities, and other amenities. In some communities, assessments cover exterior maintenance to units.

Determine if the budget includes a reserve fund for high costs. Most communities will require significant expenditures at some time—roofs replaced or private roads and parking areas resurfaced, for example. If there is no reserve fund, the association may impose special assessments when major projects become necessary. This issue can be an expensive and unanticipated financial burden.

How to Manage Your Expectations

So, you've identified your ideal home and did your homework. You are now ready to buy! But there's one more thing on your checklist: Plan to manage your expectations. With all their advantages, community associations are not perfect. Judgments are subjective and subject to change. Decisions are not always met with unanimous approval. Mistakes happen. 

Remember that some personalities are not for community association living as you think about your expectations. Some people cringe when faced with enforcing rules to maintain established community standards. Ask yourself if you're likely to have buyer's remorse the first time you run up against a rule you don't like.

Contact Us

Finally, once you're in your home, decide to get involved in your community. Attend annual meetings, serve on a committee, or even seek a seat on the association board. It's your community, your investment, and your home.Download CAI's First-Time Homebuyers Guide to HOAs for your complete checklist for buying in an HOA, condo, or planned community. Or, call us to get more information about living the HOA lifestyle!