You may have heard of a homeowner association in discussions regarding Fort Collins CO real estate, or you may be considering the purchase of a home with an HOA in place. But what exactly is a homeowner association, and what difference does it make to you as a buyer?
According to HOA USA, the primary purpose of a homeowner association is to maintain and enhance property values. The IRS describes these homeowner groups as a membership organization formed by a developer to maintain common areas and keep the appearance of the development preserved.
There are currently over 300,000 HOAs in the U.S.; membership is not optional when you purchase a home in a neighborhood with a homeowner association. Laws for these associations are specific to each state, but federal laws must also be adhered to for HOA. Homeowner associations exist for townhomes and condominiums, in small towns and large cities, with every type of amenity and representing all different populations of people. Monthly or annual fees and dues are common; volunteer homeowners often make up a board of directors.
So how does a homeowner association impact your living and housing expenses?
Common homeowner association expenses include pool maintenance, landscaping, street lights, workout facilities, and various community amenities. Each year, when the HOA board of directors works together to create the community budget, fees are determined for the year.
Fees vary by type of neighborhood and amenities, and may range from one hundred dollars or more per month. Homeowner association fees can be increased, depending on current capital projects and needs of the community.
When associations do their job correctly, funds are set aside for larger projects; when they do not save for capital projects, residents may be forced to pay special assessments.
If home- or condo-owners do not pay fees as required, the HOA may be able to foreclose on the owner.
The benefit of this homeowner association system is that residents do not have to be as concerned with routine maintenance, grounds upkeep, and other services. By paying regular HOA fees, you have the opportunity to enjoy amenities and activities you may not have otherwise been able to experience.
Another benefit of a HOA is that the association is responsible for keeping the neighborhood looking its best, which helps to keep home values up. Rules can include no RVs/boats in the driveway, no auto repair in the neighborhood, etc.
Homeowner association fees are as varied as the neighborhoods and residents themselves. All across the country, HOA are in place to serve the neighborhood and contribute to its health. State and federal laws must be followed, as well as tax regulations. There are benefits and drawbacks to being part of an HOA. It is wise to read all paperwork carefully, and to understand the language put forth by the particular association in your neighborhood. If you have questions, ask a trusted real estate expert for guidance. Carefully consider the costs and weigh all options before making a decision.