FAQ’s on HOA’s
By Renee Cohen
My family moved into our new house about five months ago. About four weeks in, just as we’re breaking down the last of the moving boxes, finishing photos and art placement, and generally coming up for air to start enjoying our new home and neighborhood, we received a letter from our HOA admonishing the state of a portion of our lawn and giving us a deadline to rectify the situation before they invoke a fine. This is after we proactively spoke with the Architectural Committee to discuss our plan for the lawn. Now, we’re left to revive a dying lawn. In July. Thanks for the glorious welcome to the neighborhood, HOA!
Is the action of our HOA unusual or harsh? In short, no. HOA’s exist for a reason and one of their purposes is to monitor the neighborhood to ensure residents are maintaining their properties according to the HOA rules and regulations. We knew what we were buying into when we bought the house, and we agreed to the HOA guidelines.
But HOA’s, whether for single family neighborhoods or condo and townhome communities, tend to incite a lot of feelings, both positive and negative, from their homeowners. And buyers really need to research the HOA – everything from the rules and regulations to the financials and assessment history – when they are buying a property governed by an HOA. Not every HOA is the same and the extent to which they legislate and limit homeowners varies from community to community.
Here are the answers to some of your most burning HOA questions:
Is it required that I pay HOA dues? Yes. If you live in a community governed by an HOA you must pay HOA dues, unless the HOA dues are voluntary. If the dues are mandatory and you do not pay them, the HOA can put a lien on your property.
What are HOA transfer fees? HOA transfer fees are the fees charged by the HOA to transfer the HOA out of the seller’s name into the buyer’s name. The fees vary from neighborhood to neighborhood and community to community; sometimes they are as little as a few hundred dollars, and other times they can be a few thousand dollars.
What is an HOA Status Letter? An HOA Status Letter is the letter issued by the HOA to the title company to outline any open, unpaid HOA dues, fines or assessments. The title company needs this information in order to make sure the property can be transferred cleanly from the seller to the buyer at closing, and all outstanding HOA monies must be paid as part of the closing.
What amenities are included in my HOA? It depends on the building or community you’re living in. In a condo building, it’s common to see the HOA cover water, sewer, trash, exterior maintenance, roof, grounds maintenance, snow removal, and building maintenance and insurance. If a pool, tennis courts, clubhouse and/or fitness area or doorman/concierge exists, the HOA usually covers these amenities as well. In a residential neighborhood, typical amenities include grounds maintenance, pool, tennis courts, and any other features that are restricted to resident use only.
Can the HOA affect my ability to sell my property? If you are living in a condo, yes. As a result of the housing market crash in 2008, new lending guidelines were introduced for condos. A buyer buying a condo with a government-backed loan (FHA or VA) could not purchase a condo in a building or complex that had 51% or more rental units vs owner-occupied units and more than 15% of the units delinquent on their HOA dues. Buyers who wanted to buy these units had to pay cash, as they could not get a loan, not even a conventional loan at that time. Since the market recovery, some of these guidelines have become less restrictive, but it’s still determined on a case-by-case basis.
There’s a lot to think about when it comes to HOA’s and it’s crucial that buyers do their homework to research the HOA of any property and community their considering; if they do that, and they’re in agreement, they’ll get along with their HOA just fine!
Renee Cohen of Coldwell Banker Residential Brokerage is a Realtor in Denver, CO. She loves educating people about the real estate market and helping her clients make good real estate decisions. Renee is happy to address any real estate questions and concerns you have!