Whether you’re single, newly married, or have a large family, there are a ton of reasons to live in a development community. These popular places have neighborhood pools, tennis courts, fitness centers, and frequent activities to keep adults and kids sane in the summertime. Even if you don’t plan on using them regularly, amenities can indirectly boost property value when you’re ready to sell or rent. Of course, all these features cost money, and that’s where a Homeowner’s Association (HOA) comes in. If a property is in an HOA, the resident must sign an agreement to become a member. It doesn’t matter if you’re entering into a For Sale By Owner (FSBO) or a For Rent By Owner (FRBO) deal. The person who takes over the house or condo is considered part of the membership.
HOAs have governing documents and something called Covenants, Conditions, and Restrictions (CC&Rs) that declare what their bylaws are. The laws have to do with common responsibilities, architecture, and behavior of residents, such as:
- Residents will not build fences higher than 8 feet tall
- No glass containers are allowed by the pool area
- Any home modifications must be pre-approved
Associations are run by a Board of Directors voted in by members during special elections. The Board determines how often they meet to discuss ongoing issues in the development and records these minutes for the community.
Those entering into an FSBO and FRBO deal should inform themselves of the CC&Rs of the Homeowner’s Association. This will let you know all the rules you need to follow before becoming a resident. Here beycome shows you an example of a Community Disclosure from a Florida HOA. Other documents, such as board meeting minutes, will also be helpful in understanding their priorities and how they work. Every member within an HOA must adhere to all rules, even if the property changes hands.
2. HOA Fees and Dues
There’s a cost to being a member of an HOA, and it’s shared by all residents. All of those great amenities are paid through monthly or yearly dues. If you are buying a FSBO property for the first time, you must include the cost of membership when financing. These dues should be just as important to consider as monthly rent or mortgage payments.
Additionally, consider any extra expenses the CC&Rs require, such as “All residents must mow their lawn once a week.” This means you now have to factor in the cost of a lawnmower or a landscaping service if they don’t provide one.
If the total amount of fees from every member does not cover the costs of the community, the Association has the right to ask for a “special assessment”, or an unexpected bill that everyone must pay. Before signing any HOA agreement, beycome recommends asking the following questions to clarify how their fees work:
- What specific services do fees cover? (Garbage pickup, sewage, etc.)
- What fees am I responsible for? (Water, electricity, etc.)
- How often do fee increases happen, and can I see a history of your fees?
- Do you have a record of special assessments? Do you have any planned for the future?
3. Potential Issues
We’ll warn you in advance that the CC&Rs are typically long documents, but you have to read them. This is because if you can’t live without your 50 lb. dog and the Association does not allow pets over 30 lbs., they may not be a match for you. Other restrictions may govern what colors you can paint your house or whether or not you can build a shed in your backyard. Regulations also affect how a property is used. So if you are looking to start an FRBO deal with another party, an HOA may have laws restricting how you rent or who you rent to. Not only that, some Associations require that units are only occupied by owners. So if you buy a house in an HOA, you may not be able to use it as an investment property later. And if you run a home-based business, there might be rules restricting commercial activity in the house.
So what happens when you’re found in violation of a rule? The CC&Rs will define the consequences, and it’s usually more fees. They’ll also require you to reverse the action you have taken, such as re-painting the house. Be careful though, because repeat offenders get liens on their homes.
Finally, FSBO and FRBO properties should already be in compliance with HOA bylaws before you enter into an agreement. So check with the owner/landlord and the HOA about the current state of the home before becoming the next resident (and beycome’s got resources for that, too!)
For Sellers and Landlords
HOA boasts some of the most well-kept properties you’ll ever see, so that makes your FSBO or FRBO deal that much sweeter. These neighborhoods generally more peaceful, safe, and raise the overall standard of living in that area, giving you ample opportunities to sell and rent.
On your FSBO or FRBO listing on beycome, don’t forget to include unique amenities that other properties simply don’t offer. If basic maintenance such as plumbing pest control is included in their membership fee, that’s definitely worth sharing!
For Buyers and Renters
Because most HOA Board members live in the communities they govern, it’s easy to get in touch with them for any additional questions and concerns. Associations are naturally designed to protect and preserve properties and support the rights of homeowners, so don’t be intimidated if this is your first time interacting with an HOA. There’s a strong sense of community pride, and there’s a good chance they want you to become a part of it. On beycome, you can view a large number of listings in Associations in our FSBO/FRBO directory.