HOA You Say?
What Is A HOA and What Are the Benefits?
Have you ever run across an acronym that is just plain funny? Maybe intentional or maybe not, but we’ve all run across these collection of letters that spell out one thing and mean something completely different, right? Let’s take a look at a few, for example. “BING.” BING means Bing It’s Not Google. How about BMW = Big Money Waster! But there is also an acronym common the housing and mortgage industries- HOA. And no, it doesn’t stand for Hold On Already! It’s the acronym for Home Owner’s Association and is an important facet when buying a condominium, townhome or a home in a planned unit development. How so?
The HOA is responsible for enforcing the conditions, covenants and restrictions, or CC&Rs that owners must follow as well as managing the property. In a condominium for example, the individual owners own the areas inside the individual unit but equally own the common areas. These common areas are such things as swimming pools, workout facilities and sidewalks. The HOA is funded by a monthly homeowners’ association dues and these amounts can vary from project to project but monthly amounts from $200 to $400 are common.
A properly managed HOA helps secure the value in the property by properly maintaining the common areas as well as making sure individual owners are following the rules. For example, there may be a restriction keeping the walkways cleared of debris or personal items such as a bicycle parked in front of an individual unit or empty boxes piled up on the back deck.
The HOA is also responsible for maintaining insurance. The insurance policy is funded by the monthly HOA dues and covers the building, amenities and liability issues. Individual owners can buy individual insurance that covers personal items in the interior of their units. In a neighborhood managed by an HOA, it might prohibit a property owner from painting a house pink with a purple roof. Or making sure there aren’t any RVs parked in the yard.
Before you buy a property managed by an HOA, request a copy of the CC&Rs and make sure there isn’t anything in there that you can’t live with. Most associations provide copies of the CC&Rs for free but sometimes there’s a small charge. The bottom line- know and review before you make an offer.