The Complete Guide to HOAs
From the high-rises and towers of Bayshore Boulevard to single family home neighborhoods in Clearwater, there are quite a few HOAs operating in Tampa Bay. In fact, the number of Americans living in communities with HOAs has increased from just 1% in 1970 to 25% today. Is an HOA right for you? Make some popcorn and get comfortable because it’s about to get real.
What is an HOA?
In a nutshell, an HOA is an organization that ensures your community looks its best, functions smoothly, and is financially prepared for major repairs (think seawall, which can run into millions). When you stop to think about it, there are quite a few moving pieces in a condo community: Swimming pools, fitness centers, clubhouses, parking garages, security gates, elevators, landscaping. Who’s going to maintain, repair or replace all that? The HOA, that’s who. The HOA is funded by everybody’s HOA dues, and the way those funds are dispersed is usually determined by the HOA’s elected officers. But I’m getting ahead of myself.
How Much are HOA Dues?
The range of homeowners association fees (aka dues) in Tampa Bay is really broad. They might be $1200 a month or more for a luxury condo loaded with amenities, while a modest, single family home community five miles inland might be more like $200 a month.
HOA dues tend to vary depending on the size of your home. The bigger it is, the more you’ll pay. Fees are usually divided into two parts: One goes toward monthly expenses and the rest goes into a reserve fund. The reserve is a safety net for unexpected expenses that arise from natural disasters as well as unavoidable wear and tear and systems that will inevitably need to be replaced, like roofs and plumbing.
The Dreaded Special Assessment
When your community is hit with an extreme maintenance expense—like a flooded parking lot due to a burst pipe—insurance will cover some of it, but the rest has to be paid by the HOA. The HOA will typically tap the reserve fund for these unexpected expenses, which may deplete the fund past the point of comfort or leave it unable to cover the expenses it had already budgeted for. In this case, the HOA may require homeowners to pay a special assessment on top of their regular monthly dues.
Let’s say the elevator in your building goes out. It costs $15k to replace it but there’s only $12k in the reserve fund. Everybody has to pony up for the additional $3k. And yes, all residents have to contribute, even if they live on the first floor—or even in another building! These assessments are called special for a reason, though. In a well managed HOA, they don’t happen very often.
What to Expect from an HOA Board
All HOAs have elected boards made up of homeowners. These board members host regular meetings where owners can gather and discuss major decisions and issues with their community. For major expenditures, all members of the HOA usually vote, not just board members. In addition to management of the common areas, homeowners associations are also responsible for seeing that its community members follow certain rules and restrictions. These rules will be spelled out in the covenants, conditions and restrictions, aka the CC&Rs.
What are CC&Rs?
After your offer to buy a home is accepted, you are legally entitled to review the community’s Covenants, conditions and restrictions (CC&Rs) over a certain number of days, usually 3-10. CC&Rs are the community rules you have to follow if you live in that community. They’re established by the HOA and meant to protect the attractiveness and value of the property. Some CC&Rs can be hundreds of pages long, but since you’ll have to abide by these laws, you should categorize them under required reading.
If you spot anything you just can’t live with, you can bring it up with the HOA board or back out of the contract and keep your deposit. If this is the place you plan to call home, bristling under rules that cramp your style probably won’t be worth it. They differ by community, but there are some you can expect to see:
Acceptable exterior paint colors
Minimum landscaping standards
Types of fencing allowed
Types of window treatments allowed
Types of security lights you can attach to the house
Controls on sporting equipment like basketball goals and soccer nets
Restrictions on number and type of vehicles and RV parking
Limits on property use that generates sound or smell
Rules on commercial use of residential land
Can CC&Rs Be Modified?
Actually, yes. They can be contested and changed with a majority vote of the neighbors in your development. This can work for or against you depending on where you stand. In a famous case, one HOA wouldn’t allow a family to park their RV in their driveway. It was a necessity for their disabled child, so the family challenged the rule with a lawsuit, arguing that the Fair Housing Act requires HOAs to make reasonable accommodations for people with disabilities. The bottom line: Restrictive covenants are meant to protect residents, but they can be changed if they’re out of line.
What if You Can’t Pay Your HOA dues?
Lenders take the HOA fee into consideration when they underwrite your mortgage, so they won’t make you a loan on the property unless they feel you can cover your mortgage payment, taxes and HOA dues. But life happens. If you’re unable to pay your HOA fees, you might be able to work something out with the HOA board.
Be sure to talk to the board before missing even one payment—Florida HOA attorney Bob Tankel says the board may have the right to foreclose on your property if you fail to pay them. Same with following the rules. If you break them, the consequences can be severe, up to and including eviction and foreclosure.
The Pros & Cons of an HOA
You’ll weigh a laundry list of factors before purchasing a home: Location, price, size, style. The existence of a homeowners association could either sweeten the pot or queer the deal, depending on where you stand. The following insights illustrate the best and worst qualities of HOAs to help you decide if this type of community is right for you.
PRO: MAINTAIN COMMON AREAS
Your HOA will handle all maintenance of common areas and repairs for the amenities outside your home. It’s one of the biggest perks of living in an HOA community. Nobody loves coughing up money for HOA dues, but it lets you off the hook for a ton of work.
PRO: RETAIN VALUE
Several years ago, real estate attorney Bruce Ailion represented a builder who sold a community of homes to investors who put no restrictions in place. Two years later, the community looked terrible. By contrast, a nearby community that had instituted an HOA to oversee lawn care and home exteriors was thriving. “Those properties still look like new and the gap in price between the two communities grows every year,” Ailion says. When there are rules governing how properties must be maintained, it keeps the neighborhood looking good and attracts future buyers to your community.
PRO: MEDIATE PROBLEMS
HOAs mediate those awkward disputes between neighbors. If your neighbors haven’t cut their lawn in several weeks or let roosters wander around crowing at 4 AM, you don’t have to confront them—the HOA will. When anyone is engaged in activity that violates the CC&Rs, the HOA sends a friendly notice… and then follows up with a less-friendly warning.
CON: FEES & ASSESSMENTS
HOA membership is mandatory in a community with an HOA—and so are the fees.
The fees can and probably will go up based on decisions you don’t have control over.
Fees can affect resale if potential buyers don’t want the extra cost in addition to their house payment.
CON: RED TAPE
That addition you’ve got planned? It’ll be especially difficult in an HOA community. Any exterior modification—even a minor one, like a play area for your kids—has to be approved by the HOA. You must submit plans describing the height, colors, location, shape and materials to the HOA board for approval. Some might even say the approval process is unreasonable.
CON: OVERBEARINGNESS
While the endless rules come in handy for preventing rowdy college students from moving in, they can also be off-putting for homeowners who like their autonomy. Plenty of homeowners don’t want decisions about their own home being made by a committee. Above ground pool in your back yard? Nope. Pets over 30 pounds? Don’t think so. Chickens providing you with daily fresh eggs? Unh uh. Overnight guests for an extended period of time? Think again. Move out and rent out the home? Hardly.
The goal of any HOA is to maintain the neighborhood aesthetic. However, if you don’t like being told what to do with your home, living under association rules may not be for you. Make sure to read your CC&Rs carefully before you buy.
