Before Buying in an HOA - Read This

Before Buying in an HOA – Read This

HOA or Homeowner’s Association is an organized committee that handles the rules and covenants of a neighborhood.

Most of the time new developments and subdivisions will have a homeowners association created by the builder or developer of the neighborhood. This is to maintain consistency with homeowners and/or manage the upkeep and maintenance of community amenities and common areas. With so many large subdivisions throughout Collin and Denton County, buying in a homeowners association is pretty common. So, it’s important to know a little bit about these associations, the rules, and homeowner responsibility.

HOA – CC&Rs.

This stands for conditions, covenants, and restrictions and is the governing documents for a particular subdivision or neighborhood. Before making an offer on a home or once you have made an offer, you should request or receive a copy of these documents. These documents will include any articles of incorporation, the bylaws for the neighborhood, the declaration of conditions, rules, restrictions, and regulations, a statement of the current periodic assessment or homeowners dues, copies of financial records of the Association, and any copies of the Association meeting minutes from the past year or two. Your real estate agent should provide these or you can contact the Association directly or from the title company.

Most of the articles contain basic information such as names and addresses. It’s the regulations and covenants that you should take a little more time on and be familiar with before choosing a home in that subdivision. You want to take a close look at the actions of the Association such as any assessments, rule creation, or financial reserves.

You should also pay particular attention to the bylaws. There may be some rules that you don’t agree with or are willing to abide by. This could mean keeping consistent with the rest of your neighbors, not changing your house color, how many animals you can have, how many vehicles you can own, or parking rules.

Related: Evaluating the HOA

Bylaws also can stipulate whether or not you can rent out your house. There may be a rule stating that no more than 50% of the properties can be leased or rented., This means that at least half need to be owner-occupied. This might affect your choice, especially if you plan on buying for investment purposes.

If you become an owner, you are agreeing to abide by all the rules, restrictions, terms, and conditions found in these documents. This also means that everyone else must abide by them as well.

These documents can be extensive, so if there’s something specific you would like to question, it might behoove you to ask the Association directly. Otherwise, you can painstakingly go through the documents or have a lawyer do it for you. Some newer associations may be more strict than older ones. Some associations may be extremely specific, with rules such as no hedges higher than 6 feet in the front yard, no trees taller than the house, or only two vehicles per lot. You can either abide by these rules or find out how to become a board member and seek to change or alter some rules.

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Financial documents.

Homeowner associations also require monthly or annual fees. These fees cover common area maintenance and management and depending on the type of association, could be used for special assessments. Special assessments may be incured to homeowners, which can increase these fees for larger purchases. Let’s say you’re in a townhome community where all of the townhomes need to be repainted. The reserve fund may not have enough to complete such an extensive job so special assessment will be issued to cover the cost. It’s important to understand about special assessments and how much reserve fund the Association has so you don’t get hit with a big fee a year or two down the line.

If you’re looking for a home that is not in an association, you won’t have to abide by certain rules other than basic ethical and etiquette rules of life. However, this also means that should your neighbor down the street decide to use their front yard as a junk car lot, there’s not much you can do about it. Associations definitely keep things consistent between the homesites.

Whether you are looking for a home in an association or without, I can offer you a customized list of properties that meet your search criteria and price throughout Collin and Denton County. Start today by browsing all of the listings for sale in some of the more popular cities and towns around our area.

Dallas | Plano | Frisco | McKinney | Allen

Prosper | Little Elm |