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Buyers and Sellers: Check those HOA (POA) documents!


Many, if not most new housing and office developments, master planned communities, and condominiums are governed by a set of rules set forth by an HOA (residential) or POA (commercial) . If you’re not familiar with the term, HOA stands for Homeowners Association. A POA is a Property Owner's Association.


Often, the original developer sets forth the initial rules. Then after a set number of homes or condominium units are sold, governance is turned over to a board composed of owners, who can make amendments, set fees, etc.


The rules include “Covenants, conditions, and restrictions” designed to protect the residents and maintain the value of the properties.


Whether this is a good thing or a bad thing depends upon your attitude. If you’re an independent sort who wishes to make your own rules regarding your home, buying into an HOA/POA may not be for you.


The Association can impose limits and exercise control over things like:

·       Hanging a basketball hoop on the garage.

·       Setting a flag pole

·       Building a fence

·       Color choices for exterior paint

·       Installing a new screen door

·       Planting a garden

·       Installing a propane tank

·       Mowing the lawn

·       Having pets – or limiting the number of pets

·       Parking

·       Keeping a boat or a motor home on your property

·       Having a home business


What this means is that buyers should read the rules and regulations with care before removing contingencies on their purchase agreement. If you as a buyer would not be happy asking permission to paint – and having to submit color samples for approval – you might want to shy away from an association that reserves the right to approve or disallow your plans.


Next – read about the fees. What are they now? What amenities or services are paid for by the fees? Are there any planned increases? Who has the authority to impose increases, and for what purpose? Is the association solvent, or will homeowners soon be asked to kick in additional funds?


Remember, there’s no use fighting about it once you’ve made the purchase. That’s a bit like purchasing a home directly under the flight path of an airport and then complaining about the noise. You can complain, but it isn’t going to change a thing.


If you’re selling – you should read those documents again.


You may find that the HOA/POA has reserved the right to approve of your buyers. If so, your agent needs to know so he or she can warn buyers that they may come under scrutiny by the HOA/POA Board.


I recently took a client to look at townhome in North McAllen. The seller was home when we viewed the property so we asked him about the HOA. We had noticed a non-functional swimming pool and broken subdivision entrance gate. Luckily he didn't mind talking and proceeded to tell us the HOA had not been meeting for years, but had recently reorganized and was asking to collect a special assessment (read: extra money aside from regular dues) to get the pool up and gate up and running. Well, he said many of the owners were not interested in ponying up the money and they didn't care if the pool and gate stayed in disarray.


My smart client decided to do her due diligence and call the HOA contact to verify the story. And sure enough she discovered the fledging HOA was a hot mess and decided to do a hard pass on purchasing that townhome.


That's a great takeaway - when doing your homework on a property, get the HOA/POA contact info and make sure to call and assess the situation before making an offer or while in your due diligence period.


Whether you’re buying or selling in the RGV, call me. I’ll be happy to do the research for you so you can rest assured that you know the important facts about any existing HOA/POAs.

 

 



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