Buying in to a homeowners' association

By Charles Scutt/CTW Features

Do you envision living in a low-maintenance community where someone else takes care of the leaf raking, snow shoveling, lawn mowing and exterior upkeep? While this may appear to be a dreamy lifestyle, the reality is that condominium, townhome and single-family developments that share common areas and provide maintenance services to residents all require membership in what can be a strict and expensive club: a homeowner's association.Also commonly referred to as a condo association, an HOA is an organization of homeowners living within a particular subdivision or multi-family development that is responsible for preserving community grounds and facilities and providing services for the common benefit of its residents. These grounds can include the parking lot, community swimming pool, shared hallways, tennis court, fitness area, golf course, gated entrance and more. The HOA serves a very essential duty, says Ken Roth, author of "Everything You Need to Know Before Buying a Co-op, Condo, or Townhouse" (Amacom, 2006)."When you have a specific community with common elements shared by the membership, they have to have a governing board, which at minimum hires property managers and oversees but really represents the homeowners who pay fees to use those amenities," Roth says. "If there are no common elements such as golf courses, gyms and tennis courts, then you merely have a town with private homes that are governed by local zoning laws."Homeowner's and condominium associations operate much like any other corporate entity, says Roth. "They are governed by a board of directors who are charged with operating the association's property and funds in accordance with applicable federal, state and local laws, as well as their charter," which is found in the HOA's documents given to each resident.Usually, the developer of the community forms the association after getting approval from the local municipality, says David Stone, president of Nevada Association Services Inc., a Las Vegas-based agency specializing in handling collections for more than 1,000 Nevada homeowner's associations. The developer appoints representatives to the HOA's board of directors until the units or homes are sold. Then, the developer passes the association over to the membership through a voting process outlined by law. Many home shoppers don't realize all that will be required of them before buying a home that's part of a HOA, says Stone. "There will be rules and regulations you need to follow, and you will have to pay money every month or quarter for assessments," he says. These assessments, also referred to as dues or fees, can amount to hundreds of dollars a month, depending on the community.Often, realtors may not remind buyers about these HOA obligations, and "with the market softening, some builders are trying to keep HOA assessments artificially low by offering incentives that cover assessments for the first six months or year," Stone says.Among the numerous rules and bylaws an HOA may institute are stipulations on owning a pet, hours of operation of the various amenities, a limit on the number of guests you can have in your unit and for how long, and rental, noise and construction restrictions, says Roth."One rule which many people seem to hate is a fire code restriction that says you can't barbecue on your terrace," Roth says. "There may also be restrictions on the placement of outdoor antennas."Before purchasing an attached or detached home within an HOA, it's important to research the community's association and its bylaws carefully, says Kenneth J. Fleisher, current chair of the real estate section of the Philadelphia Bar Association. "Talk to current residents, members of the board, and a representative of the management company," says Fleisher. "Get a copy of the rules and regulations and discuss any concerns you have with them."Next, prospective buyers should review the HOA's budget and check on the financial viability of the association, Fleisher says. "How much money is in the capital reserve, and what capital expenses are projected for upcoming replacement and maintenance costs? These are important, because the owners are responsible for the cost of all common-area repairs, such as a new roof or repaving of parking areas."Secondly, "Investigate whether there have been any recent assessments, whether plans exist for future assessments and, if so, for what expected costs," Fleisher says. "Third, find out what are considered the common areas and how they are maintained. Is it by outside professionals or by the homeowners themselves?"Also, "Check to see if there are any rules and regulations, such as restrictions on age and the leasing of units, which is very common in resort communities, he says. Ultimately, "The two biggest commitments made by purchasers in these communities are financial and social," says Fleisher. "Can you afford the costs of living the lifestyle and are you willing to conform to the applicable rules and regulations governing activities, some own which can reach into your personal residence?"If you do purchase into a homeowner's association and butt heads with the HOA down the road, you do have some recourse, says Roth. "Yelling, screaming and name calling are counter-productive. If you feel that your association is violating rules, there are many avenues to voice your complaints," Roth says. "You can hire an attorney or file complaints through various state regulatory agencies. If you are unhappy with the way things are, either run for election on the board of directors or support a candidate who favors your view. Getting involved with your HOA is the best way to protect your investment."Lastly, don't be too quick to assume that an HOA will crimp your freedom or lifestyle, says Stone. Despite the fact that unruly condo boards and excessively restrictive HOAs have garnered a lot of negative publicity in recent years, "In my opinion, HOAs get bad press and are often unfairly represented," he says. "Those who do not follow along are often the loudest and receive the most press coverage." CTW Features