During the home buying process, you have to decide whether or not you are willing to buy a home in a community governed by a homeowners association (HOA). Depending on the community in which you want to move, the HOA fees can be several hundred dollars a month. If you are unsure if a home that is governed by a HOA is right for you, here is what you need to know.
Why Are There Fees?
Some people who object to paying HOA fees are unaware of the purpose of the fee and why it can sometimes be higher in certain neighborhoods. The fee helps to cover the expenses for the upkeep of common areas. For instance, if your neighborhood has a clubhouse, the fee could be used to care for the swimming pool and building itself.
The fee that is charged is usually determined by the estimated costs of maintenance and repair for those areas. An administrative fee could also be included to help pay for the costs associated with operating the HOA. In addition to those fees, many associations include an additional amount to help build towards a reserve account to address unexpected expenses or major repairs.
Occasionally, the homeowner's association will temporarily raise the monthly fee to address an emergency situation. For instance, if you move to a condo and a roof is needed immediately, the association might temporarily raise the fee to help cover the expense and also build its reserves.
What Can You Do to Prepare for Living in a HOA Development?
If you are moving into a HOA-governed community, you have to prepare ahead of time for the experience. One of the most important ways to prepare is to get familiar with the rules of the HOA. Each HOA has its own rules and violating them could have serious consequences for you. A violation could mean fines that must be paid in addition to your regular fees.
You also need to assess the home that you are buying. If it is not compliant with the current requirements of the HOA, you should discuss covering the costs of getting compliant with the seller. He or she might agree to paying some or all of the expenses required to become compliant. If the seller is unwilling to help cover the costs, he or she might be willing to help with other fees, such as the closing costs.
Your real estate agent can help you further prepare for living in a HOA development.
Share6 December 2016
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