Must Known Facts When Buying a Home with Homeowners’ Association

You are so excited, you finally found the absolute perfect house—we get it.

But…there’s a catch—this house is in a homeowners’ association governed neighborhood.

OK…that’s not such a big deal…

Or is it?

Yes! It’s a big deal. A very big deal, especially if you don’t take the time to learn the facts about that particular homeowner’s association.

Why?

Because every one of them is different, and they each come with a specific set of rules and regulations with which you must abide by…or else!

If you are going to buy that perfect house, you MUST take the time to research and investigate its associated homeowner’s association; otherwise, you could at some point lose your home.

You’re kidding…right?

Nope!

But don’t worry, I’m here to help you with that. So please take a few minutes to learn exactly how a homeowner’s association works, the do’s and don’ts, the pros and cons of a homeowners’ association, and the one thing you must ALWAYS do if you don’t want to risk losing your home.

Are you ready to get this party started? 

Let’s do this so you can either buy that perfect house or move on to another one.

What Is a Homeowners’ Association?

A homeowners’ association is usually referred to as an HOA for short. The purpose of an HOA is to make and enforce rules and regulations for the properties within a designated subdivision. Those who purchase a home in a subdivision that has an HOA will be required to pay dues which are called HOA fees. They will also be required to follow all the existing and newly voted-in rules and regulations or face fines and penalties.

What Is a CC&R?

When dealing with an HOA, you will frequently hear the term CC&R or CC&Rs mentioned. This abbreviation stands for Covenants, Conditions & Restrictions (CC&Rs) and these are the rules that are placed on the properties within the HOA governed subdivision. These rules and limits can be determined by a builder, developer, or the managing members of the homeowner’s association for that neighborhood.

Do You Really Want to Live in an HOA Neighborhood?

If you decide to live in an HOA neighborhood, you might have to give up some of your rights and freedoms to do so. Therefore, you have to ask yourself a few questions before making that final decision about whether or not you really want to live in that HOA neighborhood.

For example:

• Do I have any amenities that aren’t allowed under this HOA?
• Am I willing to pay a higher cost to live in this HOA subdivision?
• How will I feel about being told I can’t do something I normally do or would like to do? (think paint colors, yard decor, etc.)

What are the Most Common Issues Enforced by an HOA?

Any given HOA will have their own individual rules and regulations, so you have to be diligent about learning what they are for each HOA subdivision you are considering. Just because you learned the HOA rules for that first house you passed on doesn’t mean you know everything there is to know about the next one or the one after that. You really need to thoroughly research and investigate the rules and regulations for each different HOA neighborhood.

Here are some of the most common issues governed by an HOA.

• Exterior paint colors
• Landscaping and outdoor decor
• Possible smoking restrictions
• Where, when, and how you can and can’t park

• Noise levels
• Fencing height restrictions (some HOAs don’t allow any fencing at all)
• Minimum and maximum home square footage requirements (for new construction homes)
• Pet restrictions (some HOAs don’t allow pets at all, or not large dogs, or certain breeds of dogs, etc.)
• Home use (traditional rentals, vacation rentals, home businesses, etc.)
• What amenities you are and aren’t allowed to have on your property (think trampolines, pools, swings, boats, motorcycles, RV’s, etc.)

There are more, but these are the most common issues governed by a homeowners’ association.

Who Is Responsible for What in an HOA Neighborhood?

Generally, the HOA is responsible for taking care of all the common area maintenance, upkeep, and repairs. This includes any amenities outside your home such as the pool, clubhouse, walking trails, etc. And, if you live in a condo or townhome that is part of an association management program, they are generally responsible for all major exterior replacements as well. This would include roofs, fencing, plumbing, etc.

Can You Be Evicted from Your Home by an HOA?

The answer to this question is not cut and dry. A homeowners’ association can’t directly evict you from your home like the landlord of an apartment can. However, while you own your home, the HOA owns the neighborhood where your home is located. That means you have to pay the HOA fees and abide by their rules. If you don’t pay your dues or if you don’t abide by the rules, the HOA will fine you. And if those dues and fines aren’t paid, after a period of time, the HOA will put a lien on your house. Additionally, you cannot sell your house until that lien is paid. Then, if the lien continues to go unpaid, the HOA can choose to foreclose on that lien at which time the house will be sold to pay for your outstanding liens.

Is this legal?

Yes, it is, because when you bought that home and signed all those HOA documents (which most people don’t read in full) you actually signed a document that stated you agreed to the financial penalties according to their CC&Rs. And, that the HOA can take what you owe out of the sale proceeds of your home if you don’t pay those liens that were a direct result of your unpaid dues and/or fines.

That means, even if you are paying your mortgage, but you don’t pay your HOA dues and fines and a lien is put on your home, you could, in a sense, be evicted, and your home could be forcibly sold through foreclosure.

The Pros and Cons of a Homeowners Association         

When you are trying to decide whether or not to buy a home that’s in a neighborhood with an HOA, you might find it helpful to look at the pros and cons of living in an HOA governed neighborhood. This will help you make an educated decision about whether or not an HOA neighborhood is the right choice for you.

Here are the pros and cons of living in a homeowners’ association neighborhood.

PROS:

• The HOA is responsible for the common area maintenance and amenity repairs.
• A homeowner’s association helps maintain a certain standard and uniformity throughout the neighborhood so you won’t have to worry about a junky neighbor bringing down the neighborhood’s home values. This is probably the biggest reason most people choose to live in an HOA neighborhood.
• An HOA will generally intervene on your behalf if a neighbor dispute arises.
• The HOA will provide and maintain neighborhood amenities that could add to your quality of life.

CONS:

• You have to pay recurring HOA fees that could potentially increase (although there are times they do decrease).
• Any type of remodeling or exterior modification requires you to submit your plans to the HOA first. Then there is an extensive approval process with a lot of red tape. This applies to even the most minor requests.
• An HOA has the authority to foreclose on your home under certain circumstances.
• You can be forced to pay assessments if the HOA doesn’t have the cash reserves to cover a necessary expense.
• You could be prevented from renting your home.
• You might be limited when it comes to paint colors, fencing, amenities, yard decor, parking, pets, etc.
• The HOA can dictate how often you have to mow, clean your roof, and more.
• You might end up with a set of unqualified, unreasonable, amateur current or future board members. This could mean the implementation of petty or reckless rules and/or the mismanaging of HOA funds, etc. 
• If there is an incident (weather, fire, hurricane, personal injury, etc.) and the HOA doesn’t have enough money to pay for all the repairs or the full settlement, the balance will have to be split among the current homeowners for payment and that payment could be due upon receipt.

Why You Should Always Read the HOA Restrictions and Guidelines

You probably already know that you should read every word on every page of any legal document before you sign it…right? But, let’s be honest, how many people actually do that? In reality—not many. However, reading the CC&Rs of a homeowners’ association document is paramount and is an agreement that should not be entered into lightly. Not reading and understanding all the rules and regulations of your homeowner’s association could ultimately result in you losing your home. And, at the very least, you might not be able to paint your home the color you want or put up that basketball hoop, trampoline, or swing for your kids.

Additionally, someone might take offense to that tasteful new yard decor you bought and placed in your front yard just because they don’t like the color, etc. Not reading the HOA restrictions and guidelines could have even bigger implications and perhaps they might be things you could have never dreamed would be a possibility. For example, your HOA might not allow large dogs which would mean you would either have to get rid of your beloved fur baby or move. Or, what if you have kids and pets and you intended to put up a fence, but your HOA doesn’t allow fences of any kind? The result would be a major inconvenience if you end up having to take your dog out on a leash every time he/she needs to go out or if you can’t let your kids go outside without you—ever because it’s too dangerous as they might wander off, or worse.

Then, of course, there’s always the possibility that you won’t be able to use your favorite fertilizer, install solar panels, a sprinkler system, plant your favorite type of tree, plant a garden, or implement an environmentally friendly Xeriscape.

Therefore, it’s EXTREMELY important that you read every word of the HOA’s CC&Rs. And if you find anything you don’t agree with, unfortunately, you really should walk away and find another home without so many restrictions.

The Basic Costs of an HOA

The basic costs of a homeowners’ association are mainly the HOA fees that are not optional and can be raised anytime. Additionally, your HOA fees will also be considered by prospective mortgage lenders as well. All the HOA fees you pay are put into a fund to pay to maintain the common areas of the community and its amenities.

There’s really no average fee for a homeowner’s association because it all depends on where you live and the amenities you receive, or not. However, on the lower end, you could see HOA fees as low as $100 a month, sometimes even a bit lower. And on the high side you could see Lakeland, FL HOA fees up to $550 a month, sometimes higher—much higher, it just depends.

What Happens When You Don’t Pay Your HOA Fees/Fines?

When you don’t pay your HOA fees and/or fines, the homeowner’s association will make several attempts to collect your debt before they put a lien on your home. If you still don’t pay your HOA fees and/or fines, the homeowner’s association could move to foreclose on your home. Then, if you still don’t pay those fees and/or fines, the HOA can sell your home and keep the proceeds to pay for your past due HOA fees and/or fines. This could be problematic if you are a snowbird and the HOA doesn’t have an alternative address on file for you. Or, if you frequently travel or if you only live in that home periodically. Therefore, if you buy a home in an HOA neighborhood, make sure management has several ways to reach you if needed. It might also be beneficial for you to have one of your neighbors watch over your home while you’re away, so they can let you know if an HOA notice is ever placed on your door, etc.

What’s the Difference Between a Mandatory HOA and Voluntary HOA?

A mandatory HOA is one you are required to join and pay fees for when you move into a neighborhood that is governed by a mandatory HOA. In other words, you don’t have a choice. If you want to live in that neighborhood, you have to join the HOA and pay their fees. With a voluntary HOA, unless you are required to sign a contract, a voluntary HOA will have a hard time enforcing their rules when broken. So you can’t be penalized in any way. And, of course, this type of HOA is voluntary, which means you are not required to join. A good example of a voluntary HOA is one that provides its members access to neighborhood amenities such as a pool, etc. Therefore, if you want to use the neighborhood amenities, you would have to pay the HOA fees to use them. If you don’t care to use the neighborhood amenities, you don’t have to pay the HOA fees, but you would not be permitted to use them.

What About Insurance Responsibilities?

In a neighborhood that has a mandatory HOA, the HOA pays for the insurance that covers all public and common areas such as walking trails, pools, tennis courts, and other amenities. However, if you want your property, home, and personal belongings covered, you will have to purchase an individual insurance policy just like you would if you were living anywhere else. With that being said, the insurance your HOA pays for isn’t exactly free. When you pay your HOA fees, a portion of those fees goes to cover the common area insurance.

Additionally, if you want to be fully covered, you might opt to purchase loss assessment coverage. Why? Because the HOA will generally have insurance to cover common area repairs and replacements. However, if there is ever a significant incident such as a fire, hurricane, or if someone is injured on the property, etc. and the HOA doesn’t have the money to cover the entire expense, the remainder of the bill will have to be split among the current homeowners. That’s where loss assessment coverage comes in. If you have loss assessment coverage, it will help you avoid paying out-of-pocket should a costly incident occur.

This is particularly important if you live in a neighborhood that has more than a few vacancies. Why? Because any expense overage costs are split among current homeowners. So, for example, if your neighborhood, when full, has 100 homeowners, but when an incident occurs only 50 of those homes are occupied, the overage would have to be split between 50 homeowners versus the 100 or so that it would be normally split between if the neighborhood was fully occupied. That’s why you really should consider purchasing loss assessment coverage if you decide to live in an HOA neighborhood.

What’s Next?

If you would like more information or advice on buying a home that has an HOA, please Contact Us today. At Lakeland Real Estate Group we would love to help you maneuver through the process. We have successfully helped the great people of Lakeland and the surrounding areas buy their perfect home, and we would love to do the same for you.

Other Valuable Home Buying Resources

What is a Condominium Homeowners Association – Bill Gasset

FHA Loan Requirements for 2019 – Eric Jeanette

Things To Consider When Buying A Second Home – Jeff Nelson

Best Real Estate Blogs – Joy Bender

About the author: The above real estate article “Must Known Facts When Buying a Home with Homeowners’ Association” was written by Petra Norris of Lakeland Real Estate Group, Inc.  With over 20 years of combined experience of selling or buying, we would love to share our knowledge and expertise. Petra can be reached via email at petra@petranorris.com or by phone at 863-712-4207

We service the following Central Florida areas: Lakeland, Auburndale, Mulberry, Winter Haven, Bartow, Plant City, Seffner, Valrico, Polk City, Lake Alfred, Lake Wales, Haines City, and Davenport FL.