Pre-buying, study HOA rules, costs

Before signing on the dotted line for your new home, make sure you know what the homeowners association (HOA) fees are and what they cover. Because most new planned communities have HOAs, whether you’re buying a house, condo or townhouse, factoring in that added cost is a necessary part of your home-buying budget. And the fees are mandatory.

Depending on the amenities, HOA fees can be a big bite out of the budget. Monthly fees typically range from $150 up to $850.

What does that payment cover each month? That depends on where you live.

The most basic HOAs maintain the common areas of a community. That can be landscaping, but it can also include a recreation center, a pool and walking trails. The general rule is, the more amenities, the higher the fees. Some high-end condominium complexes have everything from concierges to 24-hour security as well as fitness centers, spas, saunas and conference rooms.

Associations in a condominium or townhouse complex covers most things outside the individual units, such as the roof, paint, elevators, heating and air conditioning in common areas, and pest control. The HOA should also have insurance for the exterior of the building.

City services such as trash removal, water and sewage are also commonly covered by HOAs and, oftentimes, cable services will be included. The dues in planned, single-family-house communities often include security in gated communities.

In addition to maintenance and amenities, HOAs also have rules, called covenants, conditions and restrictions (CC&Rs) that all homeowners must follow. That can be anything from how many cats you can own and what color you paint your house to whether your kids can play in the street or you can have a boat in the driveway. HOAs are responsible for enforcing these rules and often pay a professional property management company to communicate with the homeowners and make sure everyone is in compliance.

Joe Farinelli, president of California-based Walters Management, said, “Homeowners will sacrifice a bit of freedom moving into an HOA if they want to experience the benefits of living in such a community. Make sure your lifestyle is aligned with the rules of the community, and that you can live under these rules.”

Also be aware that HOAs are able to levy special assessments for major repairs, if needed.

Before buying a house, Farinelli suggests researching three key elements:

1. Financial health of the HOA

Make sure the HOA is properly funded. Request a copy of financial information available to homeowners. Check out how often dues have been increased over the years.

2. Maintenance responsibility

What is the HOA’s responsibility and what is the homeowner’s responsibility? 3. CC&Rs Understand the rules before you buy.

The more you know, the easier it is to make the right decision.