Home buyers who are looking to live in HOA communities typically focus on two questions: 1) what are my HOA fees going to be? and 2) what is included in my HOA fees? Of course those are important pieces of information, but I wanted to write this week’s blog about the other important factors that HOA home buyers should tune into before they waive their HOA contingencies and move forward a home purchase. Follow these five steps below and you will go into your HOA membership with eyes wide open, thus limiting the number of unpleasant surprises you may encounter after you move in!
In Colorado, home buyers are entitled to ask for time to review any available documents to understand the background of an HOA. This review period usually allows for about a week to review the HOA’s CCRs (Covenants, Conditions and Restrictions), any financial reports as well as anything else that may help future home owners understand the full scope of their eventual membership into the HOA. Your real estate agent can guide you through the process of collecting the following information, and perhaps give you some advice based on her opinions and experience, she cannot make these decisions for you.
This list may look long but it is pretty important to secure your happiness in the HOA community. The sooner you get started the sooner you know if this is the HOA for you!
- Review HOA Financials and Meeting Minutes - these documents should be readily available from the HOA Board or property management company for your review. You don't have to read every word, but do look for possible red flags such as special assessments, or how often the HOA fees are raised. Be sure to look at how much in reserves the HOA has set aside for any unexpected costs. Under the Colorado Common Interest Ownership Act (CCIOA), an association is not required to undertake a reserve study, however, it must have a policy in place. If any red flags emerge or you don’t really know how to interpret the financial reports, ask a trusted CPA to review the financial statements for you. It may be worth the $150 or so you spend to ensure you have someone interpreting the data for you.
- Understand CCR Limitations - Each HOA is governed by its CCRs or Covenants, Conditions and Restrictions. There is not usually anything you can do (in the short run anyhow) to change these, so you better be able to live with these rules. Otherwise you may face HOA fines (ignorance will not be an excuse in the eyes of the board). Check for language about pets, parking, and noise control, for example. Look for the approval process for building a fence, remodeling, painting the exterior of the home or even planting a garden. Some HOAs are very strict - buyer beware! Ask yourself if there any restrictions with which you may have issues in the future.
- Talk to the Neighbors - This one is easy! When you are at the property for an inspection or other visits, ask the neighbors what they think of the HOA. Then just sit back and listen. You probably won't have to ask another question since HOA members usually have strong opinions about their HOA board and property management firm.
- Call the Property Management Company - ask to speak to the rep who serves on the HOA board if possible. Ask how committees work and learn as much about the board of directors, when they meet and how well they function. Ask about the tenure and turn over of the board. Maybe you will even want to get involved in the future!
- Look Up HOA Registration - In Colorado, since HOAs are considered quasi-governmental agencies, HOAs are required to register annually with the Colorado Division of Real Estate. You can look up the HOA you are considering on line to see if it is officially registered here.
If you would like to see housing data for Boulder County, there are plenty of statistics to check out in such as "Days on Market", "Total Inventory" and "Newly Listed Homes". We track all these market statistics for Single Family Homes (SFH) for most of neighboring towns on a monthly basis, including Louisville, Erie, Lafayette and Superior. At Louisville Realty Associates, we have the experience, energy and depth of knowledge to help you list your home for the best price. You can reach us anytime at firstname.lastname@example.org.
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