Look for These Red Flags in Any HOA Agreement

Having a homeowners association (HOA) in your area or apartment building provides some benefits, such as regular maintenance and community beautification. However, HOA rules can also be extremely restrictive, and while joining some of them is optional, others are required if you want to buy property in the area. Moreover, HOA contributions can significantly increase your monthly budget.

Before you buy an HOA, ask for and carefully read documents such as the association’s budget and its Covenants, Conditions and Restrictions (CC&Rs), which set out rules for property owners and members, and when you do, consider whether they ask too. many of you. Here are seven red flags to watch out for.

Has a limited budget or minimal funds in reserve.

Your HOA should have both an operating fund that covers day-to-day expenses such as maintenance of common areas, security and property management, and a reserve fund for long-term projects (building a new playground) and renovations. (fix a broken elevator or replace the machines in the gym). Homeowners associations must maintain a reserve of 70% – otherwise, you will most likely see an increase in fees or a special assessment paid to cover expenses.

Please note that these funds include membership fees that you and other property owners pay, so you should know (and care about) how your money is being spent.

Has the right of first refusal in the sale of real estate.

Historically, some HOAs have had a “right of first refusal” clause that requires you to offer your home to the association before putting it up for public sale. These provisions are generally discriminatory and likely unenforceable , but if you see this in your contract, it may indicate that your HOA has more problematic rules or poor management.

Its charter is difficult to change

If your HOA makes it almost impossible to change its rules—by requiring a large percentage of members to participate, or allowing votes to dissolve at intervals of 10 years or more—you are dealing with an organization that is unlikely to see big changes or adapt to new conditions. the world around him.

However, sometimes requiring a high homeowner approval threshold can be an advantage, as it prevents the board of directors from unilaterally amending the bylaws.

Has strict maintenance requirements.

It’s probably perfectly reasonable for your HOA to require regular yard maintenance, such as mowing, but requiring detailed maintenance on strict schedules is likely to be suffocating.

This restricts some property modifications.

Some HOA rules prohibit homeowners from adding a backyard terrace, installing solar panels, building fences, etc., and any changes beyond minor ones will usually require you to submit a plan for HOA approval. The HOA may also have strict rules regarding color, materials, style and height for any redevelopment projects as well as landscaping changes in order to maintain a uniform aesthetic throughout the area.

If any of the limited modifications are important to you, consider whether HOA is the best option for you.

Its pet and parking policy is overly restrictive.

Your HOA may have pet breed and size restrictions (similar to landlord rules for tenants) or ban backyard chickens or beehives, so check if you have pets you bring with you or if you dream of urban farming .

You may also be limited in how many cars you can have in your driveway or on the street in front of your house, as well as what type and for how long, so if you have more than a couple of cars, you may find yourself in violation of the rules. parking. Some HOAs also have rules regarding closing garage doors, parking commercial vehicles, or moving pods on the street.

His management doesn’t communicate well

Pay attention to how the HOA board communicates during the initial stages of the property purchase process. If they are unwilling to provide documentation, disorganized, unresponsive, or seem to avoid transparency, this is probably what you can expect as a contributor in the long run. You can also ask current homeowners about their experiences.