Condos, Co-ops and Home Owners' Associations?
By RealtyCrunch Inc•May, 2nd 2020
What is a Home Owners Association?
A homeowner association (HOA) is an organization that makes and enforces rules for the properties and their residents. If you purchase a property within a HOA’s jurisdiction, you automatically become a member and are required to pay dues.
HOA’s are run by a board of directors and collect annual fees to pay for common-area and facilities upkeep.
What is a Condo?
A condo , short for a condominium, is a single unit within a multiple unit property, for example an apartment within a high-rise building, or a townhome or a free standing single family home within a subdivision.
Your individual unit is privately owned, but the common areas are shared like a:
HOA, Co-op, Condo Pros:
- Lower maintenance, more affordability
Exterior maintenance on condo buildings (often with the exception of windows) is handled by the HOA. This includes lawn and shrub care, driveways and walkways, roofs and exterior siding. Because condos tend to be more compact and require less land than single-family homes, they can be a more affordable way to own property. Property taxes tend to be lower as well.
- Better sense of security
Some condo buildings have security staff, and there’s clearly safety in numbers. Having many other people around can be comforting, especially to older and single people. This can especially important if you work odd hours or travel frequently.
- Opportunities to be social
Some condo communities and their respective HOAs organize social events like pool parties, barbecues and doggy playdates. And because you see your neighbors in hallways and in elevators, you’re more likely than not to meet them in person.
Depending on the condo community, you may have access to top-notch amenities like a grilling area, business center, pool, dog park, covered parking, clubhouse and more, and the cost of enjoying these perks is shared among all residents.
- HOA/Condo Control you have no control unless you are involved and regulations can change over time in ways you don't like
- Investment risk You are all in ownership of the property together. If one or many people fail to pay their dues, the entire community may suffer financially. Likewise, if one or more of your fellow condo owners go into foreclosure, the units could change hands at a steep discount, affecting everyone’s property values.
- Less privacy, possibly many renters Because condominiums share common areas like the lobby, hallways and amenities, a condo might not be for you if you value your privacy. You’ll also be sharing walls, ceilings and floors with adjoining owners, so noise can become an issue. And keep in mind that some complexes may have many renters, with a constant stream of moving vans and tenants who may not be as considerate or have as great an interest in the community as homeowners.
- Parking and storage issues Many condo buildings don’t have assigned parking so you may get annoyed having to lug your groceries a long way to your unit. Storage will often to limited to a small closet or two and there may be no outdoor storage space at all.
- HOA rules, fees One of the biggest complaints about living in a condo community is that HOA rules can be restrictive, regulating everything from trash pickup to what types of items may be stored on your patio, how many pets you can have and whether you can rent out your unit. Breaking the rules can result in fines or even foreclosure of your unit in severe cases. And HOA monthly fees tend to go in one direction: Up.
- Inefficient/Bad Management HOAs and Condos can be inefficiently managed, costing you more than those maintenance items would normally cost
Common HOA costs and fees
Homeowners should expect to pay anywhere from $200 to $1,500 or more per year, depending on the amenities offered by the community such as:
- tennis courts
- swimming pools
- a gym or a
- community center
HOA fees often cover things such as:
- landscaping/snow removal
- shared assets such as roofs, exterior paint and siding
- property insurance
Questions to as your Condo, Co-op or HOA:
We’ve listed below some great questions to ask when considering the purchase of a condo:
- What are the biggest complaints?
- What’s the management team like?
- Is there storage space available?
- What does the insurance cover?
- What is covered by the monthly association fees?
- What are the rules?
- Is there any litigation?
- What portion of the property is my responsibility
- Am I permitted to rent or sublet?
- If yes, for how long?
- Are there conditions that I must satisfy to be permitted to rent my home?
- Are there flip taxes or fees?
- Are there any other fees for the transfer or sale of my unit?
- If so, how are they calculated?
- Is there a process to sell and buy within the association?
- Is there a pet policy?
- Are they financially and socially liberal or conservative?