To HOA or to not HOA

The Home Owner Associaton

Decision

 Home Owner Associations have very common in new construction and it doesn't appear to be letting up any time soon.  Yet, buyers frequently are unaware of the legal implications of purschasing a home in a neighborhood with a Home Owner Association.

Though the legal implications aren't daunting, they are real.  Home Owner Associations are "written" into one home mortgage via an addendum one signs at closing.  Secondly, Home Owner Associations are defined by state authorization and must have their organizing documents and present By Laws, Declarations and General Covenants recorded in Virginia and many other states.  Said By Laws, Declarations and By-Laws can be enforced via court action(hopefully this never happens but could).

Thus, though you may purchase a home with clear title, the Home Owner Association rules are enforceable on one's property just as are the city and state regulations that may be applicable.

As a result, my recommendation to my home buyers to read these documents closely during their 72 hour review period(Va) is a very serious point of discussion.   State law permits a buyer to walk away and get escrow money back/cancel contract if he/she disagrees with any stipulation in the Home Owner Association documents within the 72 hour period.  But State Law regarding Home Owner Associations is also clear that a home buyer accepting the documents and choosing to live in a Home Owner Association is subject to all requirements of the Home Owner Association whether presently enforced or enforced in the future.

Please don't take this wrong:  there is nothing wrong with living in a home owner association!  I live in one and love it. 

Home Owner Associations typically help a neighborhood maintain home values and the appearance of a given neighborhood.  Great opportunities to socialize and to get to know neighbors is part of most Home Owner Associations.  You know what you are buying when you buy in a Home Owner Association and pretty much what it will be years down the road.

It is simply important to knowingly accept the conditions and requirments of living in a Home Owner Association.   By doing so, you will enjoy your new home.

To not understand what you signed up for due to not reading the documents or understanding the legal element will bring much heartache and angst for anyone that fights everything the Home Owner Association requires.  Such a buyer would have be wise to simply have chosen a different home to buy.

So do buy wisely!  

I will always ensure you "Always Make the Smart Move".

Value of Condo Association or Home Owner Association

The Value of Your Condo or Home Owner Association

Establishing the value of an Association, whether a Condo or Home Owners, can be a complex dilemma for home buyers.   Associations are proven to maintain/improve home values due to consistency of home condition and an assurance that continuity of style and condition will be maintained.   It is very easy during the home search process to point out to buyers the higher values of similar age homes found in an Association versus a nearby neighborhood that has no Association.  

Though this be a truth in Hampton Roads and through out the country (as reported by NAR(National Association of Realtors), the value of such Associations will vary by buyer.  This is true for the following reasons:

1.  Association Monthly Fee reduces Buyer's price point 

2.  Amenities may be limited in given Associations

3.  Condition of homes may call into question the proper use

         of Association Funds(Condo Associations)

4.  Exterior work requires Association Approval

5.  Association can censure/fine home owner for non-compliance

          to Association guidelines

6.  Association Fees are not capped thus increase are inevitable.

7.   Rental Factor in Neighborhood

8.   Mortgage Restrictions

Of these value "adjusters", items 4 and 5 are very easy for the home buyer turned home owner to see as a "value add" element of an Association.  By simply knowing the factors that can provide censure or fine or needing Association approval and avoiding these infractions will make these non factors as relates to living in an Association.  This is normally quite easy: the infractions are outlined in the Condo or Home Owner Association documents provided to a buyer prior to purchase of the property.  In Virginia, the buyer is permitted three days to read and to accept or reject the documents, resulting in the transaction continuing or being canceled.

The other six evaluation points range in meaningfulness to each individual buyer.  For example, a first time home buyer may find a $150 condo fee restricts his/her purchasing power by $30,000 even in the present 4.5% interest rate market.  For a first time home buyer, this is a significant challenge many times.  To this first time home buyer as well as other buyers, the strong possibility of fees increasing over time can be a challenge especially in Condo neighborhoods, especially if the fees have stayed constant and the properties are in need of repair.

The rental factor and mortgage restrictions can play a part in a given neighborhood.  As most condo and home owner association bylaws and restrictions tend to have a limit the number of rented homes allowed in given neighborhood.  In addition, Condo and Town Home Neighborhoods must be approved by the VA and Dept of Housing Development(meet reporting guidelines related to a given association).  As I tell buyers, though no issues are present now whether the buyer wants the condo or town home sold or rented in the future, changed parameters of the neighborhood could impact their ability to sell or rent down the road.

Even with the challenges present in a condo or town home or a single family home, an Association may be the right choice for a home buyer.  

Yet a fair and impartial evaluation is required to make the right decision for a given buyer.

Questions on what are the benefits of a Condo/town home or a single family in a Association neighborhood?   Please comment and let me know!!!