How Much Do You Really Know About HOAs?
Is living in a planned development right for you? Are the home owners association (HOA) fees going to be worth your while? Well, it depends. Many residential communities have an HOA structure to help maintain a clean and cohesive atmosphere in the neighborhood. When you buy a condo, townhouse, or single-family home within "a planned development" you may also encounter the HOA structure. While the HOA will at times spare the homeowner from some responsibilities, they can also come with some homeowner obligations. Today we're talking about home owners association fees and what you need to know before you commit.
ALL ABOUT HOME OWNERS ASSOCIATIONS
HOA FEES VARY (A LOT)
Monthly HOA fees vary greatly depending on the location. The number and size of the development’s amenities affect rates. Fees can differ even within a development, due to variations in square footage, location, and orientation, all of which can affect how much upkeep the property will require.
WHAT YOU GET FOR THE COST VARIES
When you buy a home in a managed community, you’re actually buying a bundle of legal obligations and entitlements in addition to physical living space. Look at what is included (and not included) and keep in mind you’ll pay for perks, such as recreational facilities, whether you use them or not.
THERE MAY BE ADDITIONAL FEES
Some associations prefer a large cash reserve on hand to meet maintenance, legal, or management obligations as they arise. Others have lower fees and rely on special assessments—funds levied outside of HOA fees—for repairs and maintenance. Ask how the HOA handles repairs and maintenance so you know who is responsible for the costs—you or the association.
HOA FEES AFFECT MORTGAGES
Just like property taxes (which are not included in HOA fees at most developments), banks will consider your monthly HOA fees when deciding how large a mortgage you’ll be able to afford. Higher HOA fees could leave you with a smaller approved amount to spend on your house compared with choosing an alternative property with low or no fees.
KNOW THE HOA RULES & REGS
If you can’t find the Covenants, Conditions and Restrictions (CC&Rs) online, ask your real estate agent to acquire them for you or obtain them through contacting the HOA directly. Be sure to check if the document is up-to-date before you proceed too far into the buying process. It's really important you know what you can and cannot do as a homeowner in the community.
WHAT HAPPENS TO RULE BREAKERS
As in any community, disagreements arise within a planned development, sometimes over certain residents bending or breaking the rules. Before you buy, explore how rules are set and enforced and what penalties are imposed against rule-breakers. Sanctions can be strict. In some HOAs, the outcomes may include being fined or sued or having the HOA place a lien on your home.
READ UP ON STATE LAW
As with the ownership of property, insurance provisions within a planned development can be divided—with the HOA covering some perils or areas and the homeowner responsible for others. These are often mandated by state law. Check the law for the state you'll be living in to for the precise division of requirements. Confirm the HOA for the property you’re considering is adhering to those requirements.
PLANNED DEVELOPMENT PROS & CONS
Living in a planned development can be a mixed blessing. It offers the prospect of exchanging some control over your home for the reduced responsibilities of maintaining it, and for the benefit of enjoying shared amenities and security. It can also trade the diverse look of a neighborhood for a more uniform appearance, but with a lesser chance of a neighbor's decorating taste or maintenance habits becoming a problem.
As with any important financial decision, it's best to employ the assistance of a knowledgable and experienced local real estate agent who can help answer your questions and provide guidance every step of the way. If you'd like more information on Emerald Isle planned communities (including condos) and their HOAs, feel free to contact one of Sun-Surf Realty's real estate professionals. We're here to help!
Article Source: Investopedia
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