When you purchase a single family home in a gated community such as Kohala Ranch or even in an ordinary subdivision such as Waikoloa Village, or a condominium/townhouse on the Kohala Coast, you are obligated to join that community’s homeowners’ association (HOA) and pay monthly or annual HOA fees for the upkeep of common areas and the building.
While there are laws governing the behavior of HOA’s, these associations can still have a powerful impact on your rights as homeowner. If you are considering purchasing one of these types of properties, here is what you need to know and how homeowner’s associations work before you buy.
1. Learn the HOA’s Rules and Regulations
You may be able to find a HOA’s CC&R’s online (i.e. Waikoloa Village Association documents) as well as information about what happens if you violate a rule.
In addition to maintaining common areas, HOA’s also set certain rules that all residents must follow called covenants, conditions, and restrictions (CC&R’s). Pay particular attention to rules regarding fines and whether the HOA can foreclose on your property for non payment of HOA dues or fines resulting from CC&R’s violations. If the rules are too restrictive, you may consider buying elsewhere.
2. Comply with HOA Rules
I have recently shown a property in Waikoloa Village where the sellers had transformed their garage into a small studio for family and guests visiting. Great idea…however, buying into an existing problem can be a headache, so find out what the rules are and whether you would have to make changes to the home to comply.
3. HOA Basics and Fees
Fees will differ from each communities. The more upscale the building and the amenities it has, the higher the homerowner’s association fees are likely to be.
In addition to the monthly fees, if a major expense, such as a new roof, comes up and there are not enough funds in the HOA’s reserves to pay for it, the association may charge extra assessment that can run into thousands of dollars. Find out what the monthly/yearly dues cover; what is included.
Also make sure you have answers to the following questions:
- How are HOA fee increases set?
- How often do increases occur?
- How large is the HOA’s reserve fund?
- Are any special assessments planned for the near future?
Compare dues for the neighborhood or resort community you are considering to others in the same area. Keep in mind that you will have to pay for recreational facilities whether you use them or not. Be aware that the HOA may have rules about how many guests can use common facilities.
4. Consider Your Temperament
Are you the type of person who hates being told what to do? If so, living in a community with a HOA may be a very frustrating experience for you. One of the major benefits of home ownership is the ability to customize and alter the property to suit your needs, but HOA rules can sometimes interfere with this.
Homeowners associations can be your best friend when they prevent your neighbors from painting their house neon pink, but your worst enemy when they expect you to perform expensive maintenance on your home that you don’t think is necessary, or impose rules that you may find too restrictive. Before you purchase a property subject to HOA rules and fees, be prepared and make sure you know exactly what you’re getting into.