What You Need to Know About HOAs
Whether you're looking at Topsail Island real estate or anywhere else in the country, you'll encounter HOAs in some communities. Homeowners association (HOA) fees serve to bring structure, cohesiveness and a standard to a neighborhood. By definition homeowners associations are formed by communities with single-family homes or multiple-unit buildings, such as condominiums. As the name implies, the HOA is comprised of, and run by, the community's residents. Membership in an HOA is usually a requirement to buy a home within the community. An HOA is typically established to make and enforce rules regarding the properties within the jurisdiction. While the HOA will at times spare the homeowner from some responsibilities, it can also come with some homeowner obligations. Before you buy a home that makes you part of an HOA, here’s what you need to know so you can ask yourself if it's the right fit for you and your family.
First things first: how much? You'll want to know right away what the HOA fees are and how much you're going to have to pay each month. The number and size of the development’s amenities affect rates. For example, a development that’s guarded by a gate, and has a clubhouse and golf club is likely to levy higher fees than one that offers minimal security and only a modest common area. Fees can differ even within a development, due to variations in square footage, location, and orientation, all of which can affect how much upkeep the property will require. Most multiple listing services (MLSs) include HOA fees in the property listing so be sure to look for that in the property description and confirm it with your agent. Just because it may not be listed doesn't mean there isn't one, so be sure to ask if that home or community has an HOA.
Look at what is included (and not included) that will affect your household finances. Will you have to pay for garbage pickup, for example? Are utilities included? Which ones? What about cable and/or internet service? Keep in mind you’ll pay for perks, such as recreational facilities, whether you use them or not. Find out the hours for amenities, such as pools and tennis courts, to determine if they’ll work with your schedule. If you’d think you'll want to share these facilities with friends or family, check the rules and fees that pertain to guest use. Line up the fees—and their inclusions and exclusions—against those of other developments in the area, especially those that are already on your shortlist.
An HOA may adopt one of several approaches to financial management. These choices especially affect how it funds unexpected expenses. Some associations prefer a large cash reserve on hand to meet maintenance, legal, or management obligations as they arise. Others have lower fees and rely on special assessments—funds levied outside of HOA fees—for repairs and maintenance. Here's how the assessment route works: When a major expense, such as replacing a roof or elevator, comes up—and the HOA’s reserves lack the funds to pay for it—the association may charge each homeowner a special assessment. These levies can run into thousands of dollars.
COVENANTS & RESTRICTIONS
Since the rules and regulations of any particular HOA may be unique, don’t rely on second-hand information or past experience at other developments to learn what an HOA’s rules and covenants are. And think hard about whether you’ll be able to live with them. If you can’t find the CC&Rs online, at the HOA’s website, ask your real estate agent to acquire them for you or obtain them through contacting the HOA directly. You could find you’re restricted in more ways than you might assume. In addition to governing door color and the like, CC&Rs may limit how tall your grass can grow, whether you can plant or remove trees, which types of vehicles you can park on the street or in your driveway (bans on parking RVs are not uncommon, for example), how high fences can be, and whether you can rent out your property—just to name a few.
WHAT YOU CAN AFFORD
When contemplating a property purchase in a planned development, you'll of course factor the impact of its HOA dues into your overall finances. So, too, will prospective mortgage lenders. As they do with property taxes (which, by the way, are not included in HOA fees at most developments), banks will consider your monthly HOA fees when deciding how large a mortgage you’ll be able to afford. As a result, you may wrestle with vexing tradeoffs as you decide among properties. Higher HOA fees could leave you with a smaller approved amount to spend on your house compared with choosing an alternative property with low or no fees.
HOMEOWNERS ASSOCIATIONS FAQS
If you're looking at Topsail Island real estate, Century 21 Action's professional agents are here to help and would be happy to give you more information on our local Topsail communities' HOAs.
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