Three Things You Must Do Before Buying An HOA Home
Posted on: 2 December 2015
There are many factors that should go into a decision to buy a new home. One of these factors is the state of the HOA (home owners association) that the property is part of. Not all HOAs are created equal, so it's vital that you know the financial standing, level of control, and true benefits of the HOA that is over any potential home on your list. The following tips can help you through the process of vetting an HOA, like The Noble Company of South Carolina, LLC.
Tip #1: Check Out the Basic Rules
The rules for an HOA are called the covenants, conditions and restrictions, or CCRs. Every HOA is different. Some may only have basic rules, such as how long you can let your grass grow, how many vehicles can be parked on the street, or the type of fence you can have. Others may have more extensive rules, which can include the color you are allowed to paint, the types of plants you can grow, whether you are allowed pets, or even if you can have overnight visitors beyond a certain length of time. Make sure you are aware of the rules before you make an offer on the house. It's not a good idea to buy a home with rules you don't want to follow. Even though rules can be changed, chances are the other owners in the HOA have voted on these specific rules because they want them. This makes it difficult, if not impossible, for a newcomer to change the rules.
Tip #2: Ask for Financial Records
It's vital that the HOA is in good financial standing. You should be provided with the annual budget of the HOA, along with a list of expenditures and the amount in the reserve fund. Be cautious of any HOA that doesn't have a reserve fund or has an almost empty fund and no good reason as to why. Common items on a budget may include lawn upkeep in public areas, replacement of fences, and road maintenance. If there is no reserve fund there is no way to pay for these items when they begin to wear out and need replacement. The only time a low fund is remotely acceptable is if a major project was just completed, but then the HOA should be able to show their plan for refilling it. HOAs that are managed by an outside company often have a better grasp of their finances than those simply run by the homeowners.
Tip #3: Look Into the Past
The history of the HOA is a must-read. This will give you many clues as to what to expect. An HOA with a lengthy history of bringing litigation against homeowners is one to avoid, since it is then likely they are not serving interests of a large portion of their homeowners. You also want to look at the dues and assessments history to make. This will give you an idea of the types of raises in dues you can expect in the upcoming years. While historical documents, such as HOA minutes, are helpful, you should also walk around and talk to current residents to see how they feel about the HOA.
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