What to Know About HOAs
As you conduct your home search - you may notice that there are many great homes in and around Richmond that are located in HOA communities. Because of this, we have heard concerns from many clients filled with visions of nosy neighborhood “Karen”s and “Chad”s telling homeowners that they can’t park in front of their own houses or what exact shade of paint must be on your front door, all while paying hundreds of dollars a month in fees that "go nowhere".
Our team has sold hundreds of homes in HOAs, and we’ve read so many HOA package documents that it would make your eyes bleed - so we know a thing or two about HOAs. We also know that HOA’s are not all the same - and that in most cases, HOAs are generally beneficial for homeowners while providing protections for property values by prohibiting some of the weird and annoying things neighbors can do that can bring property values in a neighborhood down.
HOAs are a form of self-governance - like your city, county and state, but on a much smaller scale. And like your city, county and state, you have some say in what occurs - but only if you get involved, know the issues and vote. All HOAs will have prohibitions on nuisances and illegal activities, running certain types of businesses out of one’s home (they type that generates noxious smells, loud noises, & clutters the land) and keeping livestock - this is to help keep your neighborhood from becoming blighted and protecting your property values.
HOA’s come in all forms. There are minimalist HOAs that collect small fees to pay for things like the maintenance of the signs at the entrances of the community or solar street lamps. They may also have provisions for the type of fencing that you’re allowed to put up. They have very short HOA packages, and collect small annual fees - sometimes as little as $100/year - so they’re of minimal impact on homeowners daily lives.
Then there are what I like to call, "Super-HOAs” These are the types you’ll find in many planned communities and townhome/condo communities. They have much higher fees, which pay for amenities such as private road maintenance, clubhouses, swimming pools, tennis/pickleball courts, parks & playgrounds, common area landscaping - sometimes even security staff, gate guards and entrance fobs. They provide exterior maintenance services - such as annual power washing, garden bed mulching, lawn maintenace & other weekly landscaping services, snow and trash removal, lobby and common space cleaning services. They also collect funds in reserves for larger maintenance items - such as for a community lake or park, roof replacement every 20 years or so, exterior painting and such. They may have layered HOA fees too - such as for a lake that is shared by several communities or a large clubhouse/sports complex that is shared.
The vast majority of HOAs are somewhere in the middle. They have some of these elements but not others - because not all HOAs are the same. In any case, you should be aware of what services the specific HOA you’re looking at provides generally and the fees required to be satisfied with making a purchase offer.
HOAs are not optional for residents/owners. Homeowners may not “Opt-out” of being subject to the rules or benefits of an HOA, even if they are located in a community where some services might be optional - such as membership in the pool/tennis club, via a separate fee. When you purchase in an HOA, you de-facto agree to the terms and conditions of the HOA. Should you decide to not pay your HOA fees, the HOA has the right to put a lien on your property for back fees and penalties. Should you choose not to abide by other HOA rules, the community has the right to other remedies and penalties, including financial costs.
You have time to review the HOAs - and the right to back out of the purchase. By law in Virginia, as a purchaser, you must be provided with a complete set of HOA documents by the seller during the timeframe that you’re under contract on a property in order to review them. Once you receive them you have 3 days to do that review. If, during that 3 day period, you decide that the terms and conditions of the HOA do not suit you for any reason - you can provide written notice to the seller that you are using the HOA as a reason to back out of the purchase contract with no loss of any earnest moneys that have been put in escrow. Should you not provide that written notice within that 3 day timeframe then it’s assumed that you are in agreement with the terms of the HOA and are proceeding with the purchase.
Generally those HOA documents arrive fairly early in the process, but we’ve had situations where the buyer did not receive those documents until the last week before closing - in that case, the buyer still had the right to back out of the contract within that 3 day window after receiving the documents.
HOAs change over time. Just like your local government has issues that are more prominent some years and not others - HOAs exist to solve problems for homeowners, and therefore must respond and evolve to changing needs and circumstances. This could be in the form of dealing with downed trees after a storm, repairing damage to community property after a fire or flood, or even dealing with replacing roofs for homeowners (typically of townhouses or 55+ community homes) after so many years. This also means that as the costs of products and services increase, so must the HOA fees that cover all these services and maintenance - but only upon approval vote by a majority of the residents. Some HOA community residents have chosen to avoid such cost increases by pushing responsibilities to the individual homeowners, minimizing and eliminating services and maintenance, or neglecting to maintain appropriate reserves for future maintenance and upgrades - resulting in run-down facilities/properties or massive assessments for work that must be done - with the types of chaotic results one can expect from such neglect. Remember, a well-run HOA is only as good as the residents who stay informed and get involved in the running of the community.
You need an agent who is not only aware of how HOAs work, but wlll help you understand them. Some buyer agents just pass along the HOA docs and hope to minimize any discussion about them so you won't back out of the contract. Our goal is to provide you with the information you need to make a comfortable decision to move forward - therefore we make a practice of taking time to review the provided HOA documents ourselves, and then meeting with our clients to review them together. While we don’t go page by page, we do hit the high points - particularly the Financials, the Rules and Regulatons and recent HOA board meeting minutes - to get a flavor of what issues the community is going through, the maintenance schedules, as well as what residents are allowed and prohibited from doing in, around, and with their homes. This way, if the community isn’t right for you, we can get you out of the contract with minimal fuss and find you a home you’d prefer an a community that’s better suited for your needs.
HOAs help determine your insurance coverage and loan specifics. We also need to provide these documents and the HOA insurance certificates to your lender and you need to provide them to your home insurance agent. This is so that the lender and your insurance knows what’s covered by the HOA so that your loan can be underwritten properly, and your insurance will not overcharge you for coverage you don’t need when the HOA is responsible.
Knowledge is Power. The more you know about HOAs, including the pros and cons of living in such communities, the specifics of the communities you’re considering, and understanding that as a resident you have the power to influence the way your community is run - the more comfortable you’ll feel about purchasing, and getting involved in the governance of your new HOA community with your new neighbors. Always feel free to ask your real estate agent questions along the way - We’re here to facilitate getting you the information you need so you can make your purchase decision wisely.
Written by Brian E. Parker.
