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What You Need to Know About Your HOA: 5 Things

Category: Active adult communities

January 4, 2020 — When people hear about Home Owners Associations (HOA) there is generally one of two reactions. Either they loathe them, citing high costs and restrictive rules, or they tolerate them as a necessary evil. They have no super fans. Also called Community Associations, HOAs govern critical aspects of life in condominiums and active adult communities. It is essential that retirees know something about their HOA before they move in. As Joe West, CEO of the Community Associations Network, told Topretirements many years ago, the most important thing to consider when buying into a community is: “Don’t fall in love with the house before you check out the association”.

In any 55+, active adult, or condominium development that has shared facilities the Community Association is the top dog. It establishes the rules, enforces compliance, manages the assets, and insures the financial and legal well-being of their communities. Even in the most successful community plenty can go wrong. When serious problems happen, as did in last year’s condo collapse in Surfside, Florida, the consequences can even become tragic.

5 things to know about your HOA before you buy:

Before you buy you retirement dream home some due diligence is required to help eliminate the risk of serious disappointments down the road. Here are some things you need to know.

How effective is your new HOA?

The people running your HOA and the structure that governs it are critical.  Are board members forthcoming with information? Do they seem engaged and receptive, and do new members join the board from time to time? You have a right to know what you are getting into.  Are there regular board meetings, and do things get done? Is member input permitted and acknowledged? Were you able to secure copies of the minutes? Do the financial documents look up to date, and have they been audited? 

How strong are the finances?

The condo building that collapsed in Surfside had an overwhelmingly negative financial situation – although millions were needed for urgent repairs, there were almost no reserves to pay for them. Does your new community have reserves salted away for future projects like streets, elevators, roofs, painting, and other repairs? Is there a recent reserve study? Has there been a history of unplanned assessments to pay for projects, instead of carefully salting away money to pay for them?  When a board continually underfunds the budget and hopes nothing goes wrong, that should be a warning flag. If there is a significant number of homeowners who are in arrears on their dues or assessments that is also cause for alarm.

Are there serious problems coming up?

There are always building and infrastructure issues that will come up – stuff wears out and systems fail. Are these projects being talked about at board meetings, and is there a plan to fund them? Buying into a community that faces imminent huge assessments could be a costly mistake.

Has the transition from developer to HOA been completed?

Perhaps the most perilous time in any community’s life cycle comes when the developer exits the sales phase and control moves to the association. Communal assets and amenities are often sold to the homeowners, or perhaps retained by the developer. If that is the case, how much, and how, will they be paid for or managed? Does the new HOA have good bylaws and a qualified board in place to run things?

Are there HOA rules you don’t know about or appreciate?

Moving into your new active adult community  and discovering that you have too many, or the wrong kind, of pets can be a horrible discovery. You might not realize that you cannot park boats or RVs on the property, change the color of your house, or construct a fence. Get a copy of the rules and regulations, and asked questions if you are unsure.

Finally, good to know

The laws governing the nation’s estimated 270,000 residential and commercial HOAs are confusing and sometimes non-existent. States like California and Florida have extensive laws, but many other states have just a condominium law or a poorly written, often amended, HOA law. The absence of clear legal guidance can be a problem. Having an effective board and reasonable bylaws is a good defense against that.

Everyone would like an HOA with low fees. Sometimes you get good value for these fees, and sometimes you don’t. HOAs are often viewed as some type of ogre by many homeowners. But in practice most people that volunteer for these boards deserve more credit– they work hard and they spend a lot of time unraveling tricky questions. As you get familiar with your community, consider running for the board and offering your experience and hard work.

For more on this topic see the 3 part series at Topretirements.com: “Meet Your New Boss, the HOA”.

Comments? Please share your thoughts about HOAs, including your personal experience, in the Comments section below.

Posted by Admin on January 4th, 2022

Home Owners Associations – Friend or Foe?

Category: Active adult communities

February 3, 2015 — If you have spent much time by now on Topretirements.com we would be surprised if you haven’t seen a lot of Member comments about Home Owners Associations (HOAs). To many, it would seem these mysterious entities are the devil incarnate. Usually without any actual experience with the demon, these folks want to avoid what they think are treacherous fees, political cabals, and mean-spirited rules at all costs. Only occasionally do we see someone sticking up in their defense. This article will try to dispel some of the misinformation about HOAs, and then let you draw your own conclusions – are they are something to be avoided or appreciated? We’ve also included links to our (more…)

Posted by Admin on February 3rd, 2015

What You Need to Know When the HOA Takes Over from the Developer

Category: Active adult communities

Updated May, 2020 (originally published in 2010). In light of a recent lawsuit which resulted in a $35 million payment by the developer at Solivita for excess HOA fees, this article seems timely.

This article is Part 3 in our series about Home Owners Associations (HOA’s). Part 1 was called “Meet the New Boss – Your HOA“, and Part 2 was “What You Need to Know about Your Home Owners Association“.  Both of those generated numerous interesting comments which are worth reading. We are grateful to Joe West, CEO of the Community Associations Network, for his assistance in preparing this series.

 Home Owners Associations (also called Community Associations or condo associations) and their homeowners face a (more…)

Posted by John Brady on March 2nd, 2010

What You Need to Know about Your New Homeowners Association

Category: Active adult communities

Updated October 17, 2016 — This is the 2nd of a 3 part series of articles about homeowners associations, the organizations that have an outsized influence on your life in a condo, 55+, or active adult community. Sometimes they are called Property Owners Associations, or simply Community Associations. The first article, “Meet the New Boss, Your HOA”, talked about many of the problems to be of aware of concerning Home Owners Associations. Part 3 focuses on “What You Need to Know When the HOA Takes Over from the Developer“. In this article we were fortunate to gain an in-depth interview with Joe West, CEO of Community Associations Network, who provided his insight on the basics everyone should know before they commit to living in any (more…)

Posted by John Brady on December 1st, 2009

Meet the New Boss – Your HOA

Category: Active adult communities

Updated Sept. 2016 – This updates our 2009 article on Home Owner Associations, the introductory piece of a 3 part series about these important, but controversial organizations (often called Community Associations). The 2nd in the series features an insightful interview with Joe West, CEO of the Community Associations Network about the issues buyers should know about Home Owners Associations before they sign on the dotted line. Part 3 focuses (more…)

Posted by John Brady on November 9th, 2009