Should I Avoid Buying a House With High HOA Fees?

High HOA fees aren't always a sign of problems, but you'll need to plan ahead for this regular obligation.

By , J.D., University of Washington School of Law

In searching for a home to buy, you might find that many of the available or most enticing ones are within existing developments and governed by a homeowner's association (HOA). However, if you've done any research at all, you've probably noticed that some of these places have very high fees: often several hundred dollars per month. Particularly if you're hoping to stay in this home for several years, that raises a potential worry: could these fees keep going up and up?

That's what we'll discuss here, including suggestions for how to dig deeper.

HOA Fees Can Be a Significant Monthly Obligation

You're right to take homeowner's association fees into account when buying a property. They represent the ongoing financial obligation you'll have as an owner to pitch in on the costs of building and maintaining common areas and in some cases parts of your own property, such as a shared roof or walls.

Too-high fees can be a problem not only for you but if they exceed some other owners' ability to pay. That can result in disputes and foreclosures, which ultimately could lower your quality of life and the market value of homes within that community.

HOA Fees Can Rise Over Time

Yes, the possibility exists that the HOA monthly fees will rise. The trouble is, that possibility exists whether the fees are high now or not. In fact, unusually low fees are sometimes a sign that the association hasn't been able to talk the owners into paying for needed maintenance, repairs, and improvements. The day will come when they can't put this off any longer, and you may have to pay some whopping special assessments along with the usual fees.

Researching Fee Concerns When Considering Buying a Property With HOA Governance

You'll definitely want to do more than take the existing monthly fees at face value when considering buying a home in an HOA. Check out:

  1. the number of owners who are paying the fees that they owe (if more than 15% of them aren't complying, the HOA may be in trouble already)
  2. the dollar amount that the HOA has in reserve (it needs money to draw on if a sudden repair or emergency arises)
  3. under what circumstances the HOA can impose special assessments or other fees, and whether it has done so recently, and
  4. whether the HOA is or might soon become embroiled in any financial or legal disputes.

How do you find out such things? First, review the master deed or "Covenants, Conditions, and Restrictions" (CC&Rs). Then, talk to the other owners, read over the minutes from recent HOA meetings, and follow up on any unsettling information you uncover.

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