In certain neighborhoods, homeowners associations provide oversight and management support to keep all properties in optimal condition. Although beneficial to homeowners, living in a neighborhood managed by an HOA takes a little extra forethought and consideration. Before buying a home with an HOA, prospective homebuyers should explore just how it works and what considerations they will need to keep in mind to avoid any surprises.
Understand How Homeowners Associations Work
Homeowners associations act in the common good of all residents in the neighborhood by making and enforcing protective rules. Single-family homes, condominiums, and other multi-family homes can all have an HOA and the rules that come with it. These rules usually center around how residents can renovate and use their properties, often going well beyond what is required by city code.
While residents fund the HOA, it is usually operated by an assigned board of directors. These individuals hold regular meetings to address rule changes, plan community renovations, and handle all enforcement needs in the neighborhood. To fund the HOA operations, residents must pay their dues on a monthly or yearly basis.
Always Review HOA Rules Before Buying
Both the rules and fees vary considerably from organization to organization, depending on the neighborhood's needs. So, homebuyers need to find out what they are signing up for before committing to joining the neighborhood.
Thankfully, it is easy to complete this step, especially when working with a real estate agent. Homebuyers simply need to request the Declaration of Covenants, Conditions & Restrictions for the neighborhood along with other relevant HOA documents.
By reading through these guidelines, homebuyers can see exactly what rules they will need to follow while living there. The documents should also outline the fees issued to each household in the HOA, though that figure can change anytime.
Check the Financial Standing of the HOA
While homeowners have to pay into the HOA, that is no guarantee that the organization is in good financial standing nor allocates the funds in a reasonable manner. Homebuyers should look into this well before committing to their purchase to ensure they will get their money's worth. Otherwise, they could pay into a system that does not actually benefit the neighborhood.
To check the financial standing of the HOA, homebuyers will need to dig into the organization's paperwork, looking closely for sign of an HOA reserve fund. The HOA should have this fund set up to cover emergency repairs and extensive maintenance tasks—or the neighborhood could suffer the repercussions. Homebuyers should also note frequent fee hikes, frivolous purchases, and other signs of poor management of neighborhood funds.
Look at the HOA's Management Structure
Each neighborhood with an HOA is either managed directly by the residents or a professional management company. Homebuyers should check into this to see how involved they will need to be with their local HOA. They can find out by attending an HOA meeting to see the management structure and watch the operations in action.
Consider the Benefits of Having an HOA
Once homebuyers explore all the aspects of the HOA, they can start thinking about how that organization could benefit them. As homeowners in an HOA-managed neighborhood, they could enjoy many amazing benefits, including:
- Preservation of their property values
- Assistance with dispute settlements
- Access to well-maintained amenities
- A strong sense of community
As long as it is well-managed, the HOA can greatly help homeowners enjoy their property for the long-term and maximize their return on investment.
Gallatin TN home buyers can explore all these areas to assess whether homes with an HOA will work for them. Their diligence in this process will ensure they understand all that comes with buying the property and living there.