What You Need to Know About Homeowner Associations

If you live in a condo, an attached zero lot line or even a single family dwelling on a fee simple lot, odds are you are a member of an HOA (Homeowner’s Association). Depending upon the bylaws, the articles of incorporation and the design criteria standards, a non-profit homeowners’ association can fine you for not mowing your lawn, painting your house any color other than a neutral earth tone, hanging the wrong type of draperies on your windows, limit the number of household pets allowed in your home and even foreclose on your home if you don’t pay your dues.

Ultimately, the HOA is created to protect the value of your property—both aesthetically and financially. Without one, landscaping can die and never be replaced. Color palettes for exterior elevations can become psychedelic and your street can become clogged with inoperable vehicles and motor homes stored over the winter. HOA exist to add continuity to developments and establish a general set of regulations for which all homeowners must abide.

Some HOA have very strict enforcement rules and can fine homeowners up to $500 per day for violations. Others have much lower fines and may fail to enforce or collect. Some HOA are managed by the members and their elected board and others have professional management. Self-managed associations are usually for single family subdivisions that have little common areas. They exist to enforce the covenant, codes and restrictions and take care of landscaping and signage, usually at the main entrance to the subdivision. Dues for self-managed associations can range between $200 and $300 per year.

Condominium associations, however, are almost always managed by a professional property management company. Each condo association is required to establish a budget with adequate reserves for replacement of common elements which may include the roes, driveways, water and sewer systems as well as the exterior elements of the building. If you are purchasing a condominium, it is vitally important that you review the budget to make sure it has adequate reserves for replacement. If not, you could be subject to an unexpected special assessment for roof repairs, replacement of driveways, et cetera. An astute buyer purchasing into an existing HOA should take the time to read the minutes of past association meetings where these items will likely have been discussed well in advance of any assessment.

Most condominium owners share equally in the cost for water and sewer of the entire building. In other words, if your condo is in a four-plex, the chances are your building has one meter and the cost for your water, sewer and even garbage pick up is shared equally by all the occupants of the building, regardless of usage. The same would be true for the expense of common area lighting. The property management company receives one bill and pro-rates the cost amongst all the occupants of that particular building. The property management company acts as your bill payer for a fee usually in the range of $10 to $20 per month.

Some homeowners associations are also part of a master association. This usually occurs in large residential developments (master plan communities) where there is a main collector road and significant landscaping generic to the enhancement of the entire development. Southport in south Anchorage and Eagle Crossing in Eagle River, both of which have a variety of housing types and multiple phases, have multiple associations that also belong to the master association. The master association has its own rules and regulations and board, as well as a separate dues structure which is usually in the range of $30 to $50 per month.

Not all associations are created equally and some are better than others, depending upon your point of view. But, one thing is certain. Before you buy into one, read the fine print to know the do’s and don’ts of your particular association as well as its budget and reserves.