When looking at houses, it’s common to think about things like square footage, number of bedrooms and bathrooms and the size of the backyard. Something that may not immediately come to mind are the rules of the neighborhood and whether you have to join a homeowners association (HOA).
HOAs are among the most controversial topics in homeownership. Some people love the services an association provides. Others may detest paying monthly dues and being under HOA supervision.
If you happen to fall into the latter group, we’ll go over when you may have the option to opt out of the HOA. If you choose just not to pay your dues, we’ll discuss the actions the association may be able to take against you.
What’s the Potential Benefit of an HOA?
If you’re looking to buy or if you already own a home with no HOA dues, you most likely are responsible for mowing your lawn, shoveling your driveway and doing general upkeep of your property. If you live in an establishment such as a condo that has monthly HOA dues, the association is most likely responsible for the general upkeep.
That’s where HOA dues come into play. As with most things in life, there’s a price to pay. Each association has different policies. Some HOA dues even include city services such as trash removal. Insurance could also be part of the equation.
How to Get Out of an HOA Contract
If you don’t want to be in a homeowners association or can’t afford it, the easiest option is not to join one in the first place. However, depending on the rules associated with your neighborhood, joining may be compulsory.
When you look at a home, if the neighborhood has rules, you should ask for a copy of the covenants, conditions and restrictions (CC&Rs). If these covenants say you must join the association, you don’t have a choice, assuming you want that house.
Whether you can opt out or not depends on the rules. You may be able to opt out of certain services and save money on your dues.
If you feel you’re in compliance and being unfairly singled out by your association, you may want to get an attorney involved to do anything from file a formal written complaint to pursue legal action if necessary. The same goes if you think that any provision of the rules isn’t legally enforceable or that the association isn’t holding up its end of the bargain.
Can I Negotiate HOA Fees?
You really can’t negotiate HOA fees on an individual basis. The only thing you can do is vote on matters that come before residents. In order to have real negotiating power, you have to get on the association board.
By being on the board, you have an increased voice on how money is spent, but it also comes with increased responsibility. If you think you can get a better rate for pool cleaning or property management, you’re now the person in charge of sourcing those services to bring the proposal to the rest of the stakeholders in the neighborhood.
One thing every resident can do is request a copy of the budget to see where money is going. Having an accurate picture of the current situation will help you make informed decisions when things come up for a vote.
Do HOA Fees Ever Go Away?
Once an association is started in a neighborhood or condo complex, fees for members of that HOA are ongoing until the association dissolves. This makes sense because the association’s mission is to provide ongoing services.
Most of the time, you’ll have the HOA fees for as long as you stay in the home.
What Happens When You Don’t Pay HOA Fees?
First off, I’d recommend not taking this route. However, there may be certain extenuating circumstances that leave few or no options. While different states have different laws, there are some fundamental steps that will most likely take place.
For starters, HOA boards don’t typically wait around. If you miss a payment, you can expect to receive a letter stating that you have an outstanding debt. There may even be details about the next steps the board will take to recoup the dues. As with other missed payments, you can also expect to be charged a late fee plus interest.
That’s only the beginning, though. Your rights as a homeowner can be suspended in the community. If your association has common areas such as a pool or clubhouse, your right to use such areas could be revoked, along with your right to vote on HOA matters.
If you have a vacation property that you rent out part of the year, you can expect to have the money you thought you’d be getting for rent go directly to your unpaid dues. However, once you’re caught up on your HOA dues, you’ll start receiving your money again.
The above consequences are serious, yes. As you’ll find out, though, it can get a whole lot worse. For example, the association can file a lien on your property. If you sell the property, the lien and any other fees will be deducted before you get your money.
In some states, you can be evicted from your property, although this only occurs in drastic situations. In this case, the association would rent out your unit or home until you are all caught up on your payments. In rare instances, your property can also be foreclosed on. Associations typically try to avoid this route, as the responsibility for all taxes and utilities falls to the HOA.
To avoid any consequences, there are steps you can take. The first thing you can do is keep an open line of communication between you and the association. If you know you’re going to be late or miss a payment, let your board know ASAP. Some boards will work with you to come up with a payment plan.
Now, we want to hear from you. Do you have any other tips when it comes to dealing with HOA dues? Let us know in the comments below! If you’re in a market for a home with or without HOA dues, talk to a Home Loan Expert today!
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