Homeowners Associations (HOAs) can be divisive. Some people feel it’s someone else telling them what to do with their own property, and others think they are necessary to keep property values high and communities looking nice.
Wherever your fall on the opinion spectrum, the fact is an estimated 39 percent of North Carolina homeowners have their property in an HOA. So it’s likely you’ll have dealings with one at some point in your life (if you don’t already). So it pays to be informed.
“The purpose of an HOA is to help the owners maintain the value of their property,” says Stacey Gillespie, the Division Manager for Henderson Association Management. “Outside of an HOA people could park on the grass, not take care of their property … which can decrease everyone’s property values.”
Henderson Properties has been in the HOA management business for 20 years and currently manages 210 HOAs in the greater Charlotte area, Indian Trail, Davidson, Rock Hill and Boone.
They’ve seen it all.
“Some of it is just common sense — no you can’t turn your swimming pool into an ice rink,” Stacey says.
But some tips, like looking up your HOA’s financials before you close, aren’t as obvious. And not knowing could cost you a pretty penny.
We spoke to the pros at Henderson Association Management about everything we need to know about HOAs, and here’s what they had to say.
Before you buy
When you’re choosing a new place to live, HOA information may not seem worthy of a spot on the priority list. But it’s worth a bit of research before you close, particularly if you’re buying a condo or townhome.
Check the accounts
For example, those financials we mentioned earlier will give you a crucial window into what you could be on the hook to pay for in the future.
“Before you move, you need to check the financial status of your new community,” Stacey says. “Let’s say you move into a townhome or a condo and find out the building needs a new roof in a couple of years. If the HOA was mismanaged and they don’t have the money, the owners would have to pay out of pocket.”
Stacey says to request the budget, financial statements and other relevant financial documents from the HOA — they should provide it to your real estate agent or the current owner, who can pass it along to you.
Know the rules
Most HOAs have a “rule book” that will tell you what is and isn’t allowed. These documents, often called Covenants, Conditions and Restrictions or CC&Rs, are how the powers that be will determine violations.
“People don’t read these documents but they should,” Stacey says. “People will move in and say ‘if I would’ve known this, I never would’ve moved in.'”
Some good things to check out:
- What kinds of pets are allowed (and the weights). Can your rooster move with you to your new townhome? What about your 80-pound German Shepherd? You’ll need to consult the CC&Rs for your new HOA — and decide whether it’s a dealbreaker.
- Can I add a basketball goal? What about a pool? It’s hard to predict the future, but try to think long-term about what you might want to add to your home, and see if your potential HOA allows it.
Get the paper trail
See something questionable at your potential new home? You’ll need to ask the current owners to provide documentation that it’s allowed.
Is the house the only one in the neighborhood with a brand-new retaining wall? Or a child’s playset in the sideyard?
Stacey says anything that looks different from the rest of the community should come with documentation that the HOA has approved it. Otherwise, you could be stuck with the cost of removal after you close.
Dos and Don’ts for Property Owners in HOAs
DO know what your HOA dues cover. Stacey says the monthly or yearly fee may seem steep, particularly in condos or townhomes. But that fee often covers lots of amenities like cable, internet and even pest control.
DO know what your insurance covers. Stacey says many policies cover only the building, not the contents inside, leaving property owners potentially under-insured.
DON’T make any exterior changes without approval from your HOA. Especially if it could affect your neighbors, like drainage and grading. “If you do something in your yard and it affects your neighbors, you’ll have to pay for both. But if you get permission from the board and something goes wrong, the board would be responsible in the future.”
DON’T get offended if you receive a violation notice. The board or management company understands sometimes things happen (i.e. you go on vacation for two weeks without mowing your grass). These notices aren’t personal and they aren’t looking for an apology or explanation — they just want it fixed.
HOA Management Company vs. HOA Board
Stacey said it’s a common misconception that the HOA management company controls the HOA’s funding and decisions.
But in reality, it’s your HOA’s elected board.
“The HOA management company provides an outside perspective and advises (the board) on the best decisions so they don’t get in legal trouble, but the board members make the decisions,” Stacey says. “It’s the management company’s responsibility to let them know there’s an issue, but the board has to give us permission to complete the work.”
For example, if you call your HOA management company and say your building needs a good pressure washing, the company can come back with estimates from several companies — but that building won’t get washed until the board gives the OK.
“The best way to get involved is to help elect that board,” Stacey says. “If you don’t like the decisions that are being made, go and vote at the annual meeting.”
Stacey says to think of an HOA like a business. Typically an HOA management company will manage the business side of the HOA, including:
- all financial items i.e. paying invoices and collecting assessments
- all mail-outs i.e. flyers informing people of meetings
- insurance claims
- sending violation letters when applicable
How to know if you need an HOA management company
Many HOAs are self-managed, meaning their boards handle all the fiduciary, maintenance and other needs for the community themselves.
This can mean neighbors are giving violation notices to other neighbors — a potentially awkward situation.
“An HOA management company takes the emotion out of it,” Stacey says.
If you’re driving around your neighborhood and notice unkempt properties, poorly-maintained common areas or other problems, it might be time to call in an HOA management company.
“Each HOA is established with a set of legal documents, and when you close on your property, you sign the agreement,” Stacey says. “If you’re seeing broken windows, torn screens … it’s our job to come in and enforce those rules.”
The Henderson Association Management difference
Henderson Association Management has two decades of HOA management experience to help communities be the best they can be. Their philosophy: Keep boots on the ground as much as possible.
“What differentiates us is we do the inspections and manage them ourselves,” Stacey says. We put our eyes on the property and that’s the thing most companies don’t do. They often outsource that.”
By sending their own managers out to communities to do the inspection, Henderson Properties can more thoroughly answer questions from the board.
Henderson Association Management also prides itself on offering support to its managers. All Henderson Properties’ community managers have an assistant and accounting team, and most are certified by various community management trade associations.
Shelly L. Henderson, is a wife, mother and business owner of Henderson Properties in Charlotte. Along with her husband Phil, Shelly has owned and operated Henderson Properties since 1998. Her recent book Starting From Scratch tells a tale of her journey from launching a hobby to a career all the while raising two kids. You can find it on Amazon at the link.
