What to Look for When Buying into an HOA/COA

Minimal or even no common elements will be important to me as well.

As for swastikas, I would be submitting a fair housing complaint.

I am not sure where HUD is with confederate flags at this point, especially if the only sign that the owner is a jerk is the flag.

I think it's almost guaranteed that I will not be happy with most boards. There's a number of people here who I think are or were great directors. But the newbie directors who post here almost always scare the hell out of me. If everything else looks good except the board, I have to be ready to accept 'good enough, because I sure as heck do not want to do all the work.'

Bancs,

My suggestion is to read the governing documents prior to finalizing purchasing. If a sales contract doesn't provide it, put it in as a contingency. This way, you will know what is and isn't provided.

I would also suggest that you insist on a review of the financial statement and the past 6 board meeting minutes. This will allow you to determine where the Association is financially and what they are currently thinking (or issues they are dealing with). Again, make your review and acceptance a condition of the sale.

I would suggest requesting 3-5 days to review the documents once received.

Congrats on the sale of your home.
Good luck in finding the home you desire.

Tim

FWIW, it's the 'hostile environment' aspect of Fair Housing law that may result in swastikas on display being the subject of a viable Fair Housing complaint.

I looked up the ten most (liberal or conservative; pick your preference) cities in the state where I am moving and headed to one of them. I too can cope with the lawn signs, as long as I can pick and choose with whom I hang out.

I think you and I are packing at the same time. The key for me each day is a short list of what I am going to pack that day. Then go bike ride and drop some things off at the thrift store.

I've handled escrows for the past 13 years and never been asked for any HOA docs of a purchaser when they signed a purchase agreement. I've never been asked to provide documents from a seller to give to a person that had just signed a purchase contract. Once the purchaser was selected, the documents are provided in escrow.

A year after I moved into a HOA, I built a website for the community which provided all the documents, agendas, minutes, financials, reserve studies, annual reviews, governing documents, budgets and annual disclosures. This was gone with full blessing of the board. The PM, not the board, tried to sue me. Guess they thought I was infringing upon their revenue stream. But, people who might be considering buying into that community had a leg up on most any other community.

There is an easy solution to most problems: read the CC&Rs before you buy. It is better to buy into an HOA that has rules that you agree with (or at least can live with) rather than hope you have a board that will enforce only the rules that you like.

It varies by State. Virginia actually requires everything I mentioned to be provided as a condition of sale and, by statute, the buyer has time to review and withdraw the offer with zero penalty.

See: § 55.1-1808. Contract disclosure statement; right of cancellation
and
§ 55.1-1809. Contents of association disclosure packet; delivery of packet. for more info.

Shelia,

Said way better than I said. I should clarify. My tolerance only goes so far. One or two homes in a neighborhood with unkempt lawns and distasteful lawn displays do not alarm me. Any more than that, I will give a thumbs down.

I am moving back to a small city in the Midwest that I previously lived in for 20 years to be closer to family. Certainly some things have changed since I left 13 years ago, but I am pretty familiar with the neighborhoods with the exception of the newer developments. Most neighborhoods are not governed by an HOA but this seems to be changing as the new developments all are governed by an HOA.

Time is on my side. I can take my time to investigate the parameters of these new developments which is what I am leaning towards. Thanks to this site, I am armed with some great information.

I divide a home search into two phases, Vetting and Getting Serious.

The Vetting stage:

* Think about whether you're looking for re-sale or new construction. If the latter, do some research on developers in your area and stick to the ones with good reputations and happy customers.

* Start reading the CC&Rs and other legal agreements (usually available on the county recorder's website) and eliminate the communities with deal breakers or vague/ambiguous provisions. The latter can result in poor enforcement and/or continuous squabbling.

* Deal breakers for me include amenities, especially pools or "attractive nuisances", and other potentially expensive or hazardous maintenance items such as ponds. I'm going for the minimalist look. I also don't want neighbors above or below me, which eliminates many condos. I'd also eliminate communities over a certain age, especially with condos since it can be hard for outsiders to get a true picture of its physical condition.

* An absolute must-have for me: a strict, unambiguous rental restriction with a clear prohibition on short-term "rentals". This is more important for condos since these communities attract investors, and they can ruin a community. Owner-occupants and investors have differing interests, period - and I think people are generally happier in communities where they're more like their neighbors than not.

* For those communities that get past these things, I'd visit them and seeing what kind of condition they're in. For communities that are no longer under development, you can probably get a feel for how well the common area is being maintained, whether or not restrictions are being enforced, and even a sense of "neighborliness" if you visit when people are normally out walking dogs and the like. Visiting can also give you a feel for what it is like to live there. Eliminate or at least put a question mark next to the ones where you see issues. Communities under development automatically stay on the list unless there is a big chunk of undeveloped land right next to it, in which case they get a question mark.

The Getting Serious stage:

* This will depend in part on the housing market in your area. Right now resales in my area are being snapped up overnight and selling for well over asking prices, which likely means an unwise financial decision since buyers won't have time to do the necessary financial evaluation of the community. If this describes your area, I'd recommend holding off unless you happen to find a screaming deal that is worth the financial/legal risk you'll take. Or limit yourself to new construction (which has its own risks but these can be planned for).

* Sticking with new construction will make financial evaluations easier. It also can make it easier for you to get elected to the board while the community's direction is still being set. It's much better to start off right than it is to have to change course after s series of financial missteps.

Things to Remember:

* Fast decisions tend to be unwise decisions, which is why my vetting stage takes the most time and why I don't want to like in a hot housing market.

* Communities change, and individuals' housing needs change. Don't assume you will live in your new home until they carry you out feet first.

* Condo communities generally have more turnover in the membership and can change "personality" more quickly than an HOA with single family homes.

* If you're older, a 55+ community may be attractive. However, there are a number of legal hoops the community must jump through to maintain that status, which will put more demands on the board and the community manager - you'll have less wiggle room to elect/hire mediocre people.

I've actually been thinking about this a lot.

Once a person gets to a certain age, they can develop physical limitations and this can happen unexpectedly and overnight. It can limit the type of housing they want: single floor, accessible features, probably an attached garage for the remaining years they'll still be driving, and no outside work beyond maybe planting a few flowers in pots on a patio. This in turn means either renting, owning in a condo/townhome community, or owning a single family home and hiring their own contractors to handle the exterior maintenance.

Choices are limited, are often constrained by money and location, and I hear you about possibly having to accept red flags because the other options are worse.

I've said in the past that if I have to live around a bunch of tenants, then I want the benefits of being one myself. What I do not want is the downside of living around transients along with the obligations of home ownership.

I was thinking earlier about the business of landlords vs. owner-occupants. I think when the laws governing HOAs/COAs were developed, lawmakers envisioned owner-occupants in the homes - landlords were an afterthought at best, and sort of snuck their way into the conversation because being able to rent out your property is traditionally a right of homeowners from the pre-HOA days.

Nobody has thought much about whether or not being a landlord is compatible with our notions of owning in a community association.

Issues don't come up unless the percentage of landlords goes beyond a certain number, at which point there can be problems (increasing violations, loss of FHA or other mortgage opportunities, neighbor-to-neighbor conflicts, inability to fill board positions, inability to make quorum at annual meetings, etc.). The problem becomes much more obvious in condo communities where this sort of thing happens more often, and it can go as far as a group of investors gaining control of the association and turning the entire project into rental property, as happened in Florida during The Great Recession.

Right now condo communities are more at risk, but I've heard talk that investors are starting to target single family home HOAs as well.

The interests of people who treat their property as an investment do not coincide with those who live in their property. This becomes more obvious when the two groups are legal and financial partners.

I go back to the notion of an HOA/COA as a corporation/business. If all of the owners are able to act in their own interests (true in HOAs/COAs) and act in ways that are detrimental to the well being of the business, how long will that business be able to function? In small for-profit businesses, a problematic partner is often bought out by the remaining partners, but that can't happen in an HOA.

I fear if this issue becomes obvious enough to get lawmakers' attention, they'll opt for preserving the rights of individual owners over the well being of community associations. But I have to wonder about how many handicaps you can pile onto community associations before they simply cease to function as designed.

Questions I got, answers I don't got.

it figures the police would say that. I wonder what the response would be If the situation were reversed - and sadly, I'm pretty sure I know (and so do you).

I agree legal action by Someone is warranted at this point. I don't know how HUD would respond or how quickly, but as someone said on another website, there should be an attorney out there somewhere who'd help this family sue the hell out of this asshat. Maybe the neighbors could join in - I recall reading about one who recorded the racket and posted it on Facebook with the family's blessing. The guys address has already been published, so it'll be interesting to see how the other show drops.

Which brings us back to the subject at hand and why I think it's really useful to walk around and talk up the neighbors. There may not be a situation like this, but perhaps you can get a glimpse of how people address issues with their neighbors. Some want the HOA board to do everything, while others have a knack for trading tit for tat - and we know how that can escalate. A few actually behave like the adults they are - hopefully that's the majority.

For the board's part I would want to see one that encourages people to try and work out disputes like adults and make it clear what they will and will not address. This also leads into how CCR violations are handled. Ask the neighbors how that works. Is the board trying to be consistent and fair - or does there seem to be certain people who nitpick over every damned thing?

Cathy has some great suggestions! To her point on the developer, I think I'd have to add asking the developer when the community will be turned over to the homeowners and what's being done to prepare for that. Anything can affect the first question, but the answer to the second is what would play a larger role in my decision.

Ideally, there would be training for the soon to be new board members and an initial reserve study. If there's already an interim board, I'd So THEM about training (did they take advantage?). Are the homeowners being informed regularly? You can't be responsible for how they feel, but to make sure complete and accurate information is available. I'd also want to see if the assessment has be set at a realistic level from the start so I forgave to worry about a 50% or higher increase the month after the homeowners took over.

I am not sure I agree. At my former condo, a few years I immediately reported harassment, including a threat of sexual assault, by a neighbor to the cops. (Anyone scratching their head: Yes, I am pulling a George Sand on this forum.) The cops said they could do nothing. They did not even make an official report.

I have called the police two more times since I started renting a few years ago, due to ruckuses down the street where people were threatening each other. The cops never even showed up.

I read an op-ed piece in my local paper where someone else reported the same problem.

At this moment, I suspect the staggering increase in the number of homeless folks nationwide has overwhelmed police departments.

For the Virginia Beach family, there may be criminal harassment statutes. But I remember ten years ago in my overwhelmingly white HOA the police were adamant that they were not going to address harassment. The police said it was a civil matter.

I too was thinking a pro bono attorney might step up and address the Virginia Beach situation.

I expect the state of Virginia also has fair housing laws and likely some agencies that will process a complaint.

The last several weeks I have been helping a Floridian with a Fair Housing complaint. I am pretty sure the condo was targeting his of-Asian-descent wife. He got a lot of action and quick out of his state agency. Settlement talks are nearly complete. Knock on wood.

It's great that the Virginia Beach situation is getting so much media coverage.

I think there is a lot of injustice in this world. More and more I realize the media cannot get to everything.

Because of the increase in homelessness and the bloated stock and housing markets, indicating the gap between rich and poor is exploding, I think a revolution, like the French Revolution, is likely in the next several years.

For me, I looked at what I really wanted. A HOA has it's "benefits". Which people seem to overlook. If I were looking for a place that had a clubhouse/pool/gym/other amenities then it would trigger in me more concerns/questions. I also would recognize those come at a price. Am I willing to pay that expense for the access and joy it may give me? Well I do like a pool but I don't want one in my back yard. Have to take care of it 24/7. Plus take up yard space.

When looking to build knew everything is basically HOA now a days. So I decided to look for one with the least amount of amenities but still had rules for consistency. We have retaining ponds that only fill up when it rains. So the future expenses will be minimal in the future.

My new neighbor next door said "I wish had moved into an HOA that had a pool". I looked at him and told him "You have to PAY for that". People often overlook the facts of what they will have to pay for in the future when you want a lifetime of amenities.

One minor issue that buyers need to be aware of:

Many condos include utilities such as water in the monthly assessments. If you live alone, be aware that you will be subsidizing the water usage of those who live with others. In fact my communities governing docs contain a statement that including utilities in assessments may provide an unfair advantage to some owners and an unfair disadvantage to others. (This annoys the cookies out of some of our single homeowners.)

Townhome style communities tend to not include things like water because each unit can be separately metered. But it's still worth paying attention to just in case.

I lived in one townhouse association where we had a master watering meter. We switched to individual meters. It was very easy. required a 30 minute plumbing job. I admit I remember no numbers but I do remember as an owner I was not unhappy with it. Finally I could have a hose and wash my car in the driveway which I could not do before.

Update:
In my new state, I have a realtor helping me find both stand-alone houses and townhomes with garages. The townhomes tend to be individually metered for water. Some of the townhomes where I am are quite nice for my price range, in good neighborhoods, some with basements. I asked about roofs at one. My realtor made inquiries and said the HOA had a specific plan for new roofs, starting in 2025. Having a plan is half the battle.

All new or recent construction homes belong to HOAs, typically with a pool. I won't touch them.

What is hard is seeing a home I like and finding it is under contract within a day or so.

I believe sellers continue to get asking prices and then some.

The realtors consistently say "This is not a bubble. Buyers are bringing cash, lots of it. In particular, many out of state buyers are purchasing homes for rentals. This is because of a housing shortage. These folks, who bring cash, are driving up home prices." The realtors say the low interest rates are not behind the increase in home prices.

I am not sure the realtors are being accurate on the point.

One city not far from where I am now has cracked down on short term rentals, because they are hurting the chances of people who want to own a home.

The realtors also say what is going on now is far less frenzied than this past summer.

I think home prices where I am climbed around 10% since I was here a few weeks ago and made an offer.

I have no regrets leaving my former state.

I try to take things one day at a time. Autumn is gorgeous here. I remain prepared to buy either a townhome or small house. Starting Friday, I take a few weeks off from house hunting per se to be with my folks five hours away.

I agree that the realtor's idea of a "bubble" is off. I define a bubble as prices rising well beyond valuation, for whatever reason - I don't care why, only that real estate prices are not reasonable.

I guess the realtor's point is that it's different if buyers are paying cash rather than financing via a (possibly unaffordable) mortgage as happened during The Great Recession. And that's legit: losing your own cash is different from losing the bank's cash (your credit score won't take a hit for the former but it can for the latter).

Where I think the housing market could see problems is in the increasing move of investors into single-family HOAs as well as into COAs, since this group tends to finance their purchases using "other people's money".

Also, the housing market can be bubbly in one region and not so much in another.

Housing prices go up and they go down. Ya pays yer money an' ya takes yer chances.

What you posted adds some clarity for me on why the realtors are saying this. The realtors are younger and I think versed in what the banks did with outrageous lending practices leading largely to the Great Recession. As all here know, houses circa 2004-2007 or so were often bought 'on margin' (that is, with borrowed money). As is often repeated, owners did not have enough 'skin in the game.'

Today the lending is diminished. Banks are supposedly stricter.

If this alleged (by my anyway) bubble bursts, it may be because the house supply goes up again. As in new homes are being built at the same rates as pre-pandemic. I have not looked up the statistics, but I understand a shortage of building materials is driving a real housing shortage.

As of late last night, I have a purchase agreement on a small house with tidy homes galore all about. The homes date to the 1950s. I paid near the upper end of my house purchase budget. I am having a bit of buyer's remorse. The detached (oops) garage is dilapidated on the inside. Then again: the roof and furnace are just a few years old; the flooring is relatively new and attractive; the windows are new-ish; kitchen appliances are new-ish; and the bathroom is large, with a skylight. I suspect this will not be the last property I own but this is fine. Where I am now is much more peaceful and carefully planned than where I was in the western United States.

If the inspector finds any major issues, I will not hesitate to walk away or more likely, ask for a price adjustment. The seller is not calling the shots the way some sellers are. Though it's all relative.

Fixer-uppers were certainly out there but not priced low enough, in my opinion. Of course, who knows what a seller would have accepted. Still I did not want to live in dumpy surroundings for many weeks (months?). I happily paid more for a property in good shape at purchase. I can re-hab the garage at my own happy pace.

BancsS, I had spent a lot of time on realtor.com but then, a few days ago, connected with a realtor at one of the homes I was checking out. The realtor set me up with some better online software.

Always look at the financials. How healthy are the Reserves, any major delinquencies, is the perspective HOA facing any litigation and what for!! All of this has to be disclosed to not only owners, but perspective
buyers are allowed to have this information before buying.

Inspection turned up undesirables on the one house. I backed out of the deal. Forward.

A 2/2 spacious condo with garage came up on my search where I am. The condo fees were $500 per month. I am used to seeing $200 per month or less for the size of condo/townhome I want. "All utilities included in condo fee!" the ad boasts. For a moment I thought, "Cool." Then I came to my senses: No I do not want to share water, gas and electric with a 100 or so other owners (bar room party-ers, as SheliaH aptly puts it), as the board battles to contain costs. Given that utilities are expected to skyrocket, this is particularly so.

I am looking at a nice 1950s but updated, 1000 sq. foot home on 1.4 acres, largely grassed but also with forest on two sides and a grass yard enclosed by nice wood fencing. Very private. The subdivision's lots are each around 1.4 acres. By my standards it's practically an estate. It comes with a tractor mower. Do I want to mow at least weekly the half acre or so that is not forested? This is the price of pretty serious privacy. Not sure.

Houses where I am seem to be staying on the market longer. Home prices seem to have stabilized some.

In my last purchase I wanted an HOA with no amenities, city streets, city water and sewage, all landscaping included, builder installed fencing and no changes allowed, no home exterior changes nor landscaping changed allowed without ARC permission, single family patio home, over 65% built out, no new sections at a later time, Covenants and Bylaws I could live with, and probably more but enough for now.

Tim, I understand what you are saying. I was speaking of the townhomes that are mixed in neighborhoods with stand alone houses. They would probably require the owner to maintain their own yards and take care of the snow removal. There is a new townhome community in a town close by that may have those benefits but I would guess that you are correct that the community is responsible for road maintenance. It sounds like you have found a good community with a very reasonable assessment.

I have not done a lot of research at this point. Time will tell how the market behaves. It does show some signs of slowing down a bit.

Thank you for your input.

I've seen the same thing Tim has for communities with townhomes in addition to stand alone homes. A typical set up would involve an annual fee for the entire community (to cover the main entrance, greenspace, and community clubhouse/pool) plus a monthly assessment for the townhome owners to cover lawn care and snow removal.

But you really have to read the CC&Rs to see how assessments are structured.

I've seen HOAs with detached homes on individually-owned lots that provide lawn care. And the communities with townhome sub-associations may have separate amenities for the townhome owners which could require an additional assessment for those owners. Recently we saw a post from someone whose community has a 55+ section with its own amenities in addition to whole-community amenities that everyone, including the 55+ crowd, could use.

So the devil is in the details.

In one HOA we had both townhomes and private homes. The HOA did all landscaping to maintain a common look. Dues were based on square footage of ones unit regardless of it being a townhome or standalone.

I attended an open house for a fixer upper yesterday in a great neighborhood with good school districts etc. I looked around. The listing agent was present, answering questions. Here is a summary of the agent's and my exchange:

Me: Have you set a deadline for offers?

Agent (pleasantly): Yes. It's 5 PM today.

Me: May I ask whether the house has any offers?

Agent: Yes. There are three offers so far. One was sight unseen.

Me: How many are investors?

Agent: The seller has agreed I am allowed to divulge certain information. Here is what I have: All three offers are from investors. One is below asking. One is at asking. One is above asking. None have escalation clauses. I think one investor is from out of state. Another investor is in-state. I have told all buyers to bring me their best and highest offer. This is a standard blind bidding process. ... In general, some investors are setting terms that seem to be intended to tie up a house in case home prices fall. Meaning such offers are not desirable to sellers. [So you should not hesitate to bring me another offer on this fixer-upper?] It's a wild ride but it's still far better than this past summer.

My realtor told me about Zillow and its corporate friends buying homes and now having 7000 homes nationwide it wants to sell. Excerpt from one article:


Zillow's homebuying unit is having a rough couple of weeks.

The $25 billion property giant spent the past couple of years buying up thousands of homes through Zillow Offers, its instant buyer, or iBuyer, arm.

The bad news started rolling in October 17, when it announced that it would stop buying homes for the remainder of 2021. Jeremy Wacksman, its chief operating officer, said it was because of "an operational backlog for renovations and closings" that he blamed on "a labor- and supply-constrained economy inside a competitive real estate market."

That move sent the stock plummeting, as investors had bet on Zillow Offers as a big driver of company revenue.

More at https://www.businessinsider.com/zillow-offers-looking-to-sell-7000-homes-after-ibuyer-pause-2021-11