Jeff’s Carlsbad Blog for First Time Home Buyers

What You Should Know About HOA Fees

Posted in Financial,Homeownership by Jeff Dowler on February 27, 2008
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Carlsbad home buyers often find themselves confronted with Home Owner Association  (H.O.A.) fees when looking at homes for sale. Fees can vary widely (from under $100/months to more than $400/month) and may add substantial costs to your monthly payments. Not all homes have them , but it is important as a buyer to watch for these fees, find out how much they are, and understand what you are getting for these costs since they impact your monthly budget.

HOA fees are not restricted to condominiums, although they tend to be more common because of the type of ownership. So don’t assume that a detached Carlsbad home will not have these fees; they are more common in the formal subdivisions, but there are exceptions.

Some things to know:

  • HOA fees are not negotiable – you must pay what the required fee is, and typically they are paid monthly. In some cases in this market a seller may offer to pay the HOA fees for a period of time, say 6 months, as an incentive
  • HOA fees, as far as I know, are not tax deductible. But I am not an accountant so check with a professional. If you are buying an investment property, however, these fees MAY be deductible as part of your operating expenses.
  • HOA fees can, and likely will, change over time, based on the needs of the association and approval by its members.  In addition, special assessment may be levied if the HOA’s funds are low and large expenses are going to be incurred (say, repaving the parking lot, redoing all roofs)
  • HOA fees may cover a variety of services, e.g., grounds and exterior maintenance, water, sewer, care of the parking lot, electronic gate, garage, elevators, tennis, pool, master insurance, hot water (not common), and more. You should know in advance what your fees are paying for; check on this before you buy as part of your due diligence process.
  • Some HOAs are self-managed (and consist of the residents) and others, usually the larger ones, have a management company to take care of billing, collecting fees, maintenance, and more. There is a cost for that too.

As part of the due diligence process once you have made an offer, you will want to check out the HOA documents (By-Laws, Rules and Regulations) as well as the budget and the HOA meeting minutes for the last year (or whatever is available). You want to make sure the association is financially stable (and not involved in a lawsuit) and has money in the budget for expenses, and that they are not planning a large assessment for which you, the new owner may need to pay (of course if you find this out and still want the property, go ahead). The ore you can learn about the association up front, the better.


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