Updated: Jul 4
Many planned communities, certain neighborhoods, and condominium complexes are governed by homeowner associations (HOA) or condo owner associations (COA). HOA and COA governance is designed to maintain the integrity of the neighborhood or community. But depending on your lifestyle needs and real estate goals, they aren’t for everyone.
If you’re considering purchasing a home in such a community, there are a number of factors to consider before you make your purchase. Here’s everything a beginner should know about homeowner associations.
What is an HOA?
Every HOA is different because every neighborhood is different. However, to put it succinctly, a homeowners association is an organization in a planned community, subdivision, or condominium complex that makes and enforces rules for the properties within its jurisdiction. The organization is generally made up of neighborhood homeowners, while the property is managed by an outside company. HOAs govern the upkeep and regulations of common areas, like clubhouses, and in the case of COAs for condos and townhomes, the building exteriors.
Why Should You Choose a Home with an HOA or COA?
Condos and townhomes with owner associations are perfect for busy professionals or retirees who are looking for maintenance-free living, often with additional amenities. COAs take care of outside maintenance and landscaping. They also often also offer community facilities, like clubhouses or swimming pools, in close proximity to the home.
HOA communities also offer the security of mind that comes from knowing your neighbors have similar interests and access to the same amenities as you. In addition, homes in HOA communities retain their value better than others because their maintenance is monitored by the HOA board.
What Actions are Governed by an HOA?
HOA neighborhoods vary based on the types of homes and range of amenities available. The HOA’s responsibilities to you, and your responsibilities to them, can vary greatly. However, many HOAs are built upon “good neighbor rules,” which are designed to make everyone feel safe and comfortable.
Whether an HOA works for you or not depends largely on your lifestyle needs and real estate goals. When you’re considering an HOA or COA community, check to see if they have additional rules determining:
What color you can paint your home’s exterior.
Where and when you can park your car.
The size and number of pets you are allowed.
Whether you can operate a home-based business or park commercial vehicles.
Placement of or regulations against satellite dishes.
The age of residents.
How long you must wait before you can rent out your property (if at all), and how long you can rent it for.
What is Included in HOA and COA Fees?
Again, the range of services and amenities of each neighborhood can vary greatly. That variance is reflected in the fees charged by your HOA. Many HOA fees include:
Community facilities: fitness centers, clubhouses, tennis courts, and swimming pools.
Neighborhood parks and walking trails.
Depending on your neighborhood, additional services may include:
City services: water, sewer, trash removal, and cable.
Pest control and inspections.
COA fees often include more building-based services, such as:
Maintenance of common building areas: roofs, building exteriors, driveways, garages and storage units, etc.
Insurance for the outside and surrounding of the building.
Lawn care, landscaping, and snow removal.
Wages of condominium staff.
In the event of a major upgrade or repair, such as for a new elevator or extensive roof repairs, extra assessments may be charged if not enough funds are available in reserves.
How are COA and HOA Fees Paid?
HOA and COA fees are paid monthly, quarterly, or annually to your association’s management company. Keep in mind that fees could increase as services or property values increase.
Depending on where you buy and what amenities are included, you could pay several hundred dollars in annual association fees, or even nearly as much as your mortgage. However, they are not included in your mortgage payments since they are not part of your loan from your lender. It should be noted, though, that projected HOA and COA fees are still included in your debt-to-income ratio, which is taken into account during the mortgage loan qualification process.
Is a Home with an HOA for You?
If you raise Great Danes or if you have strong feelings for or against red front doors, an HOA may not be for you. For others, community rules may feel minor when weighed against the benefits of living with like-minded neighbors and having access to the neighborhood’s specific amenities. Whatever your opinion, it is important to understand the unique HOA or COA rules that govern a property before you decide to purchase.
Contact us today to speak with an EXP real estate agent about buying homes and land in a homeowners association-governed community.