When you purchase a condo or other type of property, there’s a chance that it may be part of a homeowners association which you would be required to join. This can be a good thing or a bad thing depending on the rules and fees of the association.
They differ greatly in different communities, and if you don’t read their rules properly beforehand you could end up making a decision that you regret.
Homeowners associations can make the difference between whether you choose to buy a property or not, so it’s important to do your research beforehand. Here are 6 things you need to know about homeowners associations before you buy into one.
1. Homeowners associations have rules
Some associations are very relaxed in their rules, while others are very strict. You may find that they work to your benefit as they regulate the community, however, you could also find that they are too restrictive for you. Rules could dictate what type of pets you have, how you decorate your outdoor area, whether or not you can rent out your property, and many other things, so read them thoroughly before you buy.
2. Your home may already violate the rules
There is a possibility that you will buy a property that already violates the rules, and you will be responsible for making the necessary adjustments. Failure to check this beforehand could end up costing you time and money, whereas if you find out in advance you could ask the seller to fix the issues or provide money towards it.
3. You will have to pay fees
Homeowner association fees can be vastly different in different communities. Generally, fees will not increase more than once annually. However, it's still helpful to find out how often they generally increase and how much they go up by. You should also find out what they cover.
4. Your mortgage application may be affected
On your mortgage application, you will be asked about homeowners association fees, and they will be considered in the evaluation of your application.
If the fees impact your debt to income ration, they could be the reason why you don't get a loan.
5. There can be consequences for breaking the rules
If you break the rules of the association or miss payments, you could be required to pay a fine or banned from using communal amenities. In extreme instances, you could even be evicted. Ensure that the fees are within your budget and that you understand the rules before committing to buy.
6. Some associations are over-managed yet others are undermanaged
In some associations, there are a couple of people who seem to want to dictate everything you do to your property.
At the other end of the scale, there are some in which nobody really cares, so changes are never made and maintenance and repairs don’t get done. Ask to attend a meeting before you buy to gauge if it seems like the association could work for you.