Homeowners associations, HOAs, are only applicable to multi-family premises such as condos or planned unit developments such as the big gated communities where everybody pays a fee for living in those communities. According to the Corporate Finance Institute, HOAs can be very problematic, but they can also be awesome. The whole point of a homeowner’s association is it is a gathering of you, the homeowners, to decide the fate of your building or your planned unit development.
When buying a property, it is very crucial that you review all of the HOA documents. This is because the HOA documents details the minutes which are the subjects that the HOA has covered. For example, if the documents are talking about bankruptcy, replacing all the air conditioners, the walls are failing or there is a sewer problem, you may want to think twice about buying that property. You as the buyer or you with your agent should review the HOA documents carefully.
Conversely, there are planned unit developments and also condo buildings where the HOA makes sure that everything is as tight as a drum. Everything at these units is clean and the landscaping is done well. Also, there are no problems with the building, and that can increase the property value.
Sometimes HOAs can levy assessments. So be really careful when you are buying HOA property. Enquire about any planned or proposed assessments. That way, there will not be any surprises when you close escrow. Homeowners associations, generally, do have legal authority over your unit. So, if you buy a unit and turn into a meth lab, they will have the authority to throw you out. In some cases, they may foreclose on the property and sell it.
