What You Should Know Before Buying a Home in an HOA Community

During your home search, you may have seen listings that mention an HOA − or homeowners association. But aside from the fact that it comes with a mandatory fee, many people don’t know what it means to live in a place that requires you to join. This includes planned communities, condominiums and cooperatives.

Homeowners in these mutually beneficial developments share the responsibilities of ownership and maintenance of common areas, such as roads, recreation areas and building materials.

“It really creates an opportunity to be less expensive and to reach a higher standard of living because you share everything related to it,” said Dawn Bauman, chief strategy officer of the Community Associations Institute. “Co-ownership and shared resources.”

Rather than being maintained by a municipality, these developments are managed by elected volunteer governing bodies known as home owner associations, or HOAs. Homeowners are required to pay a monthly fee to their HOA to help cover maintenance costs, operating costs and maintenance fees.

But what does owning a home within an HOA actually mean to its residents, and are HOAs worth being a part of? Here’s what you need to know about such communities, including benefits and drawbacks, and things to consider before joining.

How does an HOA work?

The homeowners association is made up of an elected board of directors, made up of volunteer homeowners, that oversees the community’s finances and organizes the maintenance of the common areas.

The board of directors also establishes and enforces a set of community rules, as outlined in a document known as the Agreements, Conditions and Restrictions. These rules can focus on the exterior appearance of your home, quiet hours, pet policies, parking rules and more.

Bauman said that while there is a core set of rules that most HOAs will have in common, each can create their own rules based on what the community wants and needs.

What are the advantages, and disadvantages, of being in an HOA?

HOAs tend to be well-maintained and aesthetically pleasing areas because of their own set of standards, Bauman said, which leads to higher property standards. Residents can also enjoy amenities such as pools, recreational areas and green spaces without the hassle of maintaining them, and can create a sense of community with their neighbors.

On the other hand, following a set of rules within the area may feel limited to homeowners. Also, the cost of the monthly HOA fee may not be great.

And, although several legal guidelines focus on the rights of homeowners and the operations of HOAs – including elections, meetings and fiduciary duties – there is generally no dedicated government agency that monitors their day-to-day operations.

Ed Hannaman, president of the Common-Interest Homeowner’s Coalition, which fights for fair governance and the protection of homeowners’ rights, said that leaves room for potential mismanagement, abuse of power and excessive fines within the HOA.

“You can choose the board, but it has all the power,” he said. “So they have to be government. They have to be transparent. Homeowners have to have full access to all business records. They have to see the repair and maintenance contracts, see who gets the contract.”

Things to consider before buying into an HOA

Before buying a home in an HOA, do your due diligence to make sure it’s the right decision.

Bauman said buyers should research the community association’s financial model and how much homeowners are responsible for paying to the HOA. You should also check whether there are special inspections coming up for a major project or renovation, Bauman said, and whether the HOA has funds in reserve to pay for long-term maintenance.

You should also refer to community Agreements, Codes and Restrictions to gain an understanding of their standards and rules and determine if they are appropriate for you. In addition, Hannaman said, look at what the board’s procedures were about making things like financial records, meeting minutes and vendor contracts available to homeowners.

Maddie McGay is a real estate reporter for NorthJersey.com and The Record, covering all things to celebrate living in North Jersey. Find her on Instagram @maddiemcgay, on X @maddiemcgayy, and sign up for her North Jersey Living newsletter. Do you have a tip, trend or haunted house she should know about? Email him at [email protected].

This article appeared on NorthJersey.com: What to know before buying a home in an HOA community

Reported by Maddie McGay, USA TODAY NETWORK / NorthJersey.com

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