Home and Condo Owners Associations…Buyer or Seller, what you MUST know!


By Gail Pelto

Gail PeltoA well-run homeowners or condo owners association can be a blessing! However, because I’m an equal opportunity writer, I know that a poorly managed one can be a curse! When you purchase a home in a planned development and/or condo, it might require you to join the community’s home/condo owners association (HOA) and pay its fees to help cover things like the upkeep of shared structures, amenities, common areas, exteriors and even some insurance coverage. In addition, to help with the standards of your community, the HOA membership binds you to the association’s covenants, conditions and restrictions, affectionately known as CC&R.

Owners’ associations us-ually have the same goals of maintaining a community’s quality of life and preserving property values, and that’s a good thing! HOAs offer benefits and services to their members—and members also owe certain obligations to the association and duties to their neighbors. In most cases, a condominium’s rules and regulations address more topics and the association plays a more active role than a single family homeowners association, because they oversee the actual building that the condos are in; as a condo owner, you typically own from the drywall in and every other part of the structure is shared with the other condo owners.

If you are looking to purchase a condo or a home that has an HOA, there’s a few things to find out before you make a move:

• Know that fees differ widely. They will be different from building to building, neighborhood to neighborhood and even within a development, due to variations in size, location and orientation .
• Ask how often the fees have increased over time. Ask for the financial history and if there are plans for future increases.
• Find out exactly the what fees include and what they exclude (for example, might cover trash removal, cable, etc. or might not).
• Keep in mind you will pay for recreational facilities with your fees whether you use them or not.
• Know if there are additional fees that may apply i.e. new buyer fee, assessments for special projects, etc. Get copies of the board minutes; find out what the future plans are and if their reserve fund is healthy enough to cover future improvements or if you need to plan for a future assessment. Most developments will have a multiyear plan for repairs and capital investments.
• If financing, ask your lender if fees will factor into your mortgage approval and if that particular association is approved for financing.
• Get a copy of the CC&R and review them. You need to know what you can and cannot do i.e. where to park, size of pet, landscaping restrictions, fence and roof types allowed, etc. In the CC&R, check for language that may have complicated restrictions or even prevent you from renting the property or if there are no rental restrictions.
• Find out the penalties for breaking the rules and how conflicts are resolved.
• Especially with condos, find out what your insurance obligations are vs. what the HOA insurance covers.
• If you want to sell, now or later, find out if there are financing restrictions, if the building is conventional, or FHA and/or VA approved—the more restrictions, the smaller the buyer pool when you’re ready to sell.
• Keep on top of what’s going on with your managing board. NOTE: My friend, Bonnie Manthey with Inlanta Mortgage said we’ve had a complex in our area recently change from being professionally managed to being owner managed and that change alone caused that complex to come off the Fannie May approved list. Again, this can limit the number of buyers who are able to make offers on a condo for sale.

In a nutshell, HOAs offer you having less responsibilities in exchange for some control over your home. Hope this helps and know that whether buying or selling in a owners association area, it’s a good idea to engage a professional real estate agent, like me, who is well versed in planned developments and HOAs. I can help you navigate through the ins and outs of purchasing or selling property with an owners association.

Contact Gail at 850.374.0454, gail.pelto@kw.com, or on Facebook, Destin Agent Gail – Emerald Coast Realtor.