5 Must-Know Facts About Buying A Home With An HOA
When you buy a house in a planned development area, such as a gated community or a leased land property, you are obligated to join that community’s homeowners association (HOA). You also need to pay either a monthly or an annual fee towards the maintenance of common areas. HOAs keep an eye on the residential areas within their limits and require residents to comply with certain rules and regulations. While buying a house in an HOA administered area has some advantages, the proposition has a few downsides, too. To help you make an informed decision, we discuss five facts you need to know about HOAs, before you apply for a home loan in Texas, or for that matter any other part of the US. Read on.
1. HOA’s hold the right to increase their dues/fees.
When you acquire a home loan in Texas, or any other area in the US, you are aware of the amount you would need to pay every month. The same, however, may not apply for homeowners association’s dues. HOAs can increase their fees at any time and also enforce special assessments if there is an emergency. In such cases, the fees may add up to several hundred dollars a year, based on the things that need to be fixed or replaced.
2. You may not be allowed to rent out your home.
Another important factor you need to consider when buying a property in an HOA managed area is your right to rent out the property, should you wish to do so. There may be instances when the HOA may not allow you to rent your property, or may also have a limit on the number people who may rent properties in their managed area. If you are planning to buy a house to rent out, make sure you get all the required information about the HOA’s rules related to rental properties.
3. HOA’s decide the pet policies.
This is another important factor you need to consider when buying a property. In many cases, the HOA decides the breeds of pets the residents can keep, which may or may not include your furry friends. In addition, the HOA may also levy some weight restrictions. Violating the pet rules or having a pet that doesn’t meet the specifications of the HOA may result in paying extra fees and you may also need to find a new home for your pet, or worse, yourself.
4. You may be fined for non-payment of dues.
All HOA’s have a Declaration of Covenants, Conditions, and Restrictions (CC&Rs), which provides detailed information on all terms and conditions applicable to residents. If you are unable to find the info, ask your real estate agent to source the necessary information or contact the HOA. Read the rules related to fines and foreclosure, in case you fail to pay the HOA’s dues or fines. In addition, you may also request for information about any upcoming changes in rules and the schedule of future HOA meetings.
5. Legal disputes can prove costly.
There have been instances when residents have lost their homes due to their inability to pay the hefty fees they incurred from HOA. Though losing your home is an extreme and worst case scenario, there is a possibility that it may happen, if you have a legal dispute with the HOA. If you lose the case and don’t have the enough money to afford the extra fees along with your mortgage, you may end up losing your property.
Last Few Words
The decision whether to buy a property in an HOA managed area largely depends on the rules and regulations applicable and their harmony with your needs and interest. To avoid any problems in the future, make sure you get all the information about the credibility and efficiency of the HOA. Moreover, you may also read the minutes of the association from the previous years to get a better idea about their management. If you have any questions or need more info on obtaining a home loan in Texas, feel free to get in touch with one of our experts for a no-obligation consultation. Simply call us or fill out our contact form.