If you’re on the hunt for a new home, townhouse, or condominium, you may encounter listings that require you to join a homeowners association (HOA). The members of this association take on the responsibility of maintaining the value, safety, and aesthetic of the neighborhood. For first-time homebuyers, this can seem like a daunting contract to sign off on, but in order to allay the fears of any hesitant newcomers, we’re here to describe what you should know before joining a homeowners association.
Understanding the Basics of Homeowners Associations
The HOA enforces conditions and restrictions all homeowners in the neighborhood or development must abide by. They manage the common areas and amenities – either personally or via a property management company. To understand the rules and regulations, it’s important to review the following HOA documents:
- HOA Contract: Homeowners are typically asked to sign a contract confirming they will abide by the rules of the association. It’s a legally binding document that states that if you fail to follow the rules, the HOA is permitted to issue you a fine.
- Covenants, Conditions, and Restrictions (CC&Rs): This documentation will outline the rules established by the HOA. This can include everything from the colors you’re permitted to paint your house to any renovations or alterations you can perform on your property.
- HOA Bylaws: This will contain details on how the HOA should operate, including how board members are elected, how fees can be levied, and the steps one must take to propose rule changes.
If a homeowner is found in violation of any of the HOA rules and refuses to pay the fine, the state is permitted to place a lien on your house, which can eventually lead to foreclosure. It’s also important to review what property is covered by the HOA’s insurance policy; that way, you can discover any gaps for which loss assessment coverage can help.
Conduct Research on the HOA’s Budgets and Costs
When you purchase the home, you become a member of the HOA and begin paying monthly dues. A portion of funds goes toward the upkeep of common areas – such as a community pool – and the remainder is set aside for updates or repairs. You can request paperwork documenting the operating budget of the HOA over the past and determine how your payments are being allocated to cover day-to-day expenses, maintenance staff salaries, and upkeep. If you notice inadequate funds are being reserved for repairs, it could be a sign of poor monetary management, necessitating higher dues in the future.
Making Changes to HOA Policies and Regulations
If there are rules in the CC&Rs you don’t agree with, there are steps you can take to propose changes. While the HOA’s bylaws will explain the process, most HOAs operate using the same methods: Have your neighbors sign a petition endorsing a proposed rule change to show the board members that this isn’t an isolated issue. During the next meeting, the board members can have a vote on whether the change can be passed. However, if you’re just proposing a one-time allowance to break a rule, you can submit a written request for a variance, in which the board may allow you to bypass a designated rule.
Knowing the specifics before joining a homeowners association can help you understand your responsibilities as a member before you purchase a home. While HOAs may be a welcome concept for some, they can be a deal-breaker for others, so it’s important to perform your research ahead of time. While reviewing these documents, keep an eye out for areas of your property not covered by the HOA’s master policy. At TJ Woods Insurance, we can help you obtain the appropriate condo or homeowners insurance for any vulnerable aspects of your home. Contact us today to ensure you’re fully protected.
