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? Exactly what is a Home Owner’s Association and what purpose does it serve? Buying in a HOA in Phoenix.
What is the Home Owner’s Association (HOA) and what purpose do they serve? What should you know about buying in a HOA in-Phoenix? The HOA is a legal entity formed to keep up common areas within a planned community. It enforces the rules of the community called Covenant, Conditions & Restrictions (CCRs). This could be a community of single-family homes. Additionally, it could be, a mixed community, a townhouse/condo community or even a highrise building. Homeowners are required to join that community’s HOA . Also, they are required to pay the required HOA dues when they buy a home. These dues may be collected monthly, quarterly, or annually. There may be more than one HOA in a given community. The HOA may levy dues for the homeowners to cover the cost of maintaining common areas.
HOA dues are used to keep up common areas, such as parks, community pools, gated facilities, tennis courts, and any common buildings. In condo communities, HOA dues may cover such things as pools, gyms, valet service, doormen or even tennis courts. Also, some may cover some utilities, pest control, exterior maintenance, roof repair or replacement, etc.
? What do I get For My Money?
In some communities with a home owner’s association, the services provided are minimal. It’s quite common for many Phoenix HOA’s to only cover “Common area maintenance”. This may include common or shared areas. These include monuments at the entrance to the community, mailbox area, if you have cluster mailboxes, as many communities do in the Greater Phoenix area, and care of the drainage wash areas. The cost of your amenities will vary with your HOA fees and the community’s needs.
????? Who manages a Home Owner’s Association?
A homeowner’s association will typically have a board of directors made up of the members of the community. Board members are tasked with communicating the Covenants, Conditions, and Restrictions (CCRS) to new and existing homeowners. The Association will let know homeowners of any violations to the CCRs. (ie weeds in the yard, RVs parked on the street, houses needing painting, etc.) The homeowners are the voice of the HOA.
When a buyer in Arizona submits a purchase offer on a property with an HOA, the title company will ask the HOA to send the buyer a copy of the CCRs for the community. The buyer should carefully read all the covenants, conditions, and restrictions. It is their responsibility to make sure they understand the expectations of the HOA.
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❓ What does a buyer need to know about a Home Owner’s Association When Buying in a HOA in Phoenix.
Buyers should consider the monthly cost. This is paid separately from a mortgage payment. Also, are there color pallets to adhere to when painting a house? Are there specific landscape restrictions to follow for the property? For example, does the community only allow desert landscaping, are there a number of bushes required? Are you permitted to park in the driveway or park on the street overnight? Are residents permitted to put up a garden shed on the side or back of the house? If so what size restrictions do they need to be aware of to stay in compliance with the CCRs.
? What Services Are Provided by a Homeowner’s Association?
- Conduct periodic community meetings to keep the members current on the HOA business
- Collect the HOA dues from the members and give financial accounting to the members
- Publish financial records on collected funds, use of funds and maintaining required financial reserves
- Hire and manage landscapers, pool maintenance or other services to keep up the community
- Survey the homes periodically to make sure the CCRs are being followed. Send notices of violations to homeowners and levy fines for violations.
- Hold public meetings for homeowners to communicate what is going on in the community, initiatives and hear concerns from homeowners.
- Manage the architectural review committee to approve proposed homeowner architectural changes to homes
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? Will a Home Owner’s Association help my Home Value?
Communities with HOAs typically have a consistent color palette for homes (no purple homes here). Also, they typically require the landscaping to be well maintained. Yards must conform to standards outlined in the CCRs. As a member of a community with a HOA, homeowners expect to see all homes and yards well maintained. Also, the common area maintenance within the community should show pride of ownership. For many buyers, living in a community with a community pool is an important factor in choosing where to live. Residents may appreciate the availability of a convenient community pool without the cost and maintenance of a pool in their backyard. From a safety perspective, having access to a community pool is important for buyers who do not want a pool in their backyard.
As prospective homebuyers drive through a neighborhood, the appearance of the homes is an important factor in deciding where to live. Also, buyers want to see well-maintained yards and common areas. Additionally, communities with poorly maintained yards are a turn-off to buyers. No matter how nice a home may be on the inside or how well a particular home appears from the outside, the community could be a turn-off. While curb appeal is a selling feature for home buyers, the overall feel of the community is also important. The appearance of the community is often a deciding factor.
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? HOA Fees Buyers could pay when Buying a Home
Transfer Fees
When a home is sold, the HOA will charge a fee to transfer the HOA records from the seller to the buyer. This is called the HOA Transfer Fee. This can range from $0 -$500. While the HOA determines the fee, who pays it is negotiated between the buyer and seller. In Arizona, this fee is noted on the HOA addendum which is part of the purchase contract. This can be paid by the buyer, seller or split. The HOA charges this as an administrative fee. If there is more than one home owner’s association for the property, there may be multiple transfer fees. If a home has multiple HOAs, there may be multiple fees.
Disclosure Fees
In recent years the state of Arizona passed legislation limiting this fee to a maximum of $400.00 This is a fee required by the state to be paid for by the seller. The HOA charges this fee to send the buyer the Covenants, Conditions, and Restrictions (CCRs) of the community. Additionally, buyers need to understand the community rules for anyone living in the community. In Arizona, a buyer has five days from receipt of these documents to cancel the purchase contract if they feel they can not live by these rules. Also, these documents contain the financial package for the community so the buyer understands the financial health of the community. The HOA must show whether there is pending litigation against the HOA. Additionally, they must show the financials, showing capital reserves. Also, any pending approved capital improvement fees must be disclosed.
? Typical Buyer Fees- Buying in a HOA in Phoenix
Capital improvement Fees – A capital improvement fee may be assessed on buyers at the time of purchase. In Arizona, we typically see this in adult communities where there are community pools, clubhouses, recreation centers, and often gated areas to keep up. This fee is typically paid for by the buyer, who will benefit from these services while they live in the property. Also, this fee can be negotiated, but typically it is paid for by the buyer.
We do see capital improvement fees in other communities that are not adult restricted. In communities where exterior and roof maintenance are handled by the HOA, funds may be needed for major roof repairs, clubhouse or pool renovations. Therefore, a capital improvement fee may be charged to new home buyers to generate extra revenue.
? Should I buy a home in a community that does not have a HOA?
Buying a home in a community without an HOA is appealing to many buyers. Some homeowners do not what anyone dictating the color of their home. In addition, the homeowners may want to decide what type of landscaping they have in their yard. Also, some homeowners do not want anyone reminding them to take their trash can in. Buyers may want to have a truck parked on the street or an RV beside their home.
Some communities without an HOA look just as neat and well kept as those with associations. Not having an association isn’t necessarily an invitation to parking a truck on your front yard or paint your house with purple stripes. Buyers need to drive through any community when they are thinking about buying a home. Just because there is an HOA, it doesn’t mean that the CCRs are well enforced. Look at the overall community and the pride of ownership.
?♀️ What if I don’t like the HOA rules?
Once the buyer has opened escrow, the title company sends a request to the Home Owner’s Association for the CCRs to be sent to the buyer. The HOA has ten days to give the CCRs to the buyer. There is no way to know exactly when the CCRs will be sent to the buyer. However, the buyer has 5 days from “receipt” of the documents to decide to cancel the purchase contract. Buyers should check the CCRs to make sure they are comfortable with the rules of the community. The CCRs may be sent in the form of a written document, a CD, a link to a website or an electronic copy.
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? Do I have to pay my HOA Dues?
The short answer is YES!. When you buy a home within a home owner’s association, you are agreeing to the dues and rules within that community. You are responsible for paying dues If you live in a house, condo, or townhome that is part of a Home Owner’s Association. Additionally, you are also responsible for any assessments the homeowners’ association (HOA) or condominium association (COA) may levy after you move into your new home.
? What happens if I don’t Pay my HOA Dues?
In Arizona, if you don’t pay, usually the HOA or COA can place a lien on your property that could lead to foreclosure. Arizona law allows the HOA to levy fines and recover attorney fees as they work to recover past HOA dues and the fees associated with that recovery effort. If you find yourself in this situation, consult a real estate attorney. Also, the HOA can also file a lien against your property that would be payable upon the sale of your home. If you find yourself in this situation, consult a real estate attorney experienced in Real Estate and HOA laws. One such company experienced in this area is John L. Lohr, Jr. with Hymson, Goldstein, Pantilliat & Lohr, PLLC.
In Phoenix, every Thursday investors go to the Maricopa County courthouse to bid on homes where the homeowner is delinquent on HOA dues. There is a legal process in Arizona that allows the HOA to recover delinquent dues. This could occur when the homeowner is one year behind or $1200 behind in payments. A recent article in the Arizona Republic reveals how investors are finding a new source of cheap properties. These homes are sometimes bought for pennies on the dollar. Be sure you take seriously any notice from your HOA of delinquent HOA dues.
? How Can I Change the HOA rules or Conditions, Covenants, and Restrictions (CCRs) for my community?
You can make changes by attending board meetings. Consider running for election to your HOA board of directors. Homeowner associations are just that, members of the collective homeowners in that community. And, remember, the owners are the voice of the community. The homeowners are the HOA. Be sure to attend the meetings, voice your opinion. Also, vote on issues brought before the board. Not only tell them what is wrong but share with them what is working well. If you don’t like something, seek to make it better. Being a board member of an HOA is not an easy task and is usually an unpaid position.
?️ Can there be more than one Home Owner’s Association for my house?
Can there be more than one HOA for a community? The answer is yes. There are communities within communities. There are master-planned communities, such as Ahwatukee’s Mountain Park Ranch. Within this greater community, you have townhouse communities with their own sub-community. Additionally, there are gated communities. These will not only have the gated entrance, but there may also be a community park or community pool within the gated community. Also, the secondary HOA will keep up community amenities within the specific community.
? What if my HOA fines me for a violation?
What if you receive a notice of a violation from your HOA? Check your CCRs for the process to appeal the violation. You likely have one of three arguments:
- The notice of violation is incorrect. I didn’t violate any written rules in the CCRs.
- The violation is invalid because the HOA didn’t follow the guidelines laid out in the CCRS
- The violation is not valid because the HOA is acting in a discriminatory way, citing some homeowners for something while not citing others for the same action.
Follow up with your HOA to check out the above three situations and calmly address the issue.
In Summary
Home Owner Associations can add value to homeownership. The Association will make sure all homes in the community are well maintained. For many, a HOA that maintains community areas such as a community pool, common areas, and clubhouse adds to their quality of life. Some homeowners prefer life without another entity telling them how to keep up their property. Whether you live in a community with a home owner’s association, the choice is yours. Be sure to check the CCRs of the community before you buy a home to make sure you are comfortable living with the community rules.
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