How to X-ray an HOA #7 – Management Companies and Community Amenities

Management.  The first question to ask is whether the HOA works with a professional management company.  Most HOAs prefer to be managed by companies with expertise in the issues surrounding home owners associations.    Delegating the business affairs and routine chores to HOA professionals is a big contributor to the “carefree lifestyle” touted by condo and townhouse communities. 

But many smaller developments choose self-management for budgetary reasons.  Self-management is inherently neither good nor bad, but some HOA’s handle this task much better than others.  If you are thinking about buying a unit in a self-managed area, carefully evaluate how much time you would volunteer to help run the HOA and for which specific activities.  Self-managed groups where almost everyone expects someone else to take care of things are headed for disaster.  A common theme in HOAs, self-managed or not, is that too few people volunteer and those who do, get burned out.  

Potential buyers should always read the HOA’s minutes from the past year before making a final decision about purchasing.  These records provide the best insights into the residential environment.  What were the biggest issues facing the neighborhood?  Do the minutes reveal that the HOA is financially distressed?  That crime in the neighborhood is increasing?  Are there allegations that one or more Board members acted improperly?  Also, pay attention to clues about your prospective neighbors.   For example, if a particular resident’s behavior brings the police repeatedly, you might want to think twice about purchasing the unit next door.  

The minutes will also reveal how many HOA community events occur each year, such as neighborhood garage sales, crime watch meetings, Earth Day clean-ups and BBQ’s.  Does the number and type of events fit what you want from your immediate neighborhood?  Also, arrange to speak with current owners.  They are often quite candid about what they like best (or least) about living there.

Next, go online to see if there is an HOA community website and if so, when was it last updated?  No website, or a poorly maintained one, can signal an HOA Board or a management company that does not communicate well with residents.  On the other hand, a robust site containing the Governing Documents, meeting minutes and recent news usually indicates a healthy and progressive association.

Amenities.  Ask whether the development is located on public or private roads.  For public roads, your property taxes typically pay for the street’s routine maintenance.  The downside is the HOA cannot control when or how that maintenance happens nor can the HOA restrict access to residents only. 

When HOA owns the road, residents have more control over access and the maintenance schedule, such as snow plowing, but maintenance  costs must be covered by the HOA dues.  And when a road is privately-owned, it almost always means that the utilities located above it (street lights) and below it (sewers and water mains) are also privately maintained.  Therefore, developments containing private streets should be especially vigilant about keeping the HOA reserves properly funded.

Next question: Do the HOA amenities fit your desired lifestyle?  Remember that each owner must pay for the community facilities, regardless of use.  Swimming pools and Jacuzzis are popular items, but they are expensive to maintain and carry high liability risks.   Is it important for you to have access to a party room, an exercise facility and a home theater space?  Or would you prefer a place with minimal common areas?  Also, look for clues about whether the development has been designed to appeal to a particular demographic.   For example, areas with “starter home” prices and lots of playground equipment are rarely the best choice for empty-nesters seeking a quiet environment. 

And pay attention to where the HOA amenities are located relative to the unit you might buy.  Even those who want access to a pool or a party room probably don’t want to live next door.  And some townhouse owners have discovered too late that community walking paths sometimes bring strangers uncomfortably close to their home.  Finally, keep in mind that the more amenities provided, the higher the HOA dues will be.

Coming up in Part 8, a discussion about home businesses, leasing, parking and pets.

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