When it comes to Homeowner Associations knowledge is your only weapon. There are pros and cons to buying and living in a deed-restricted neighborhood that you need to weigh very carefully. Some brief tips to keep in mind in any situation regarding an HOA:
- Read the fine print. While this applies to everything in life, it is double so for Homeowners Associations. Buying a home is the biggest purchase most people will ever make so do not let a technicality get you.
- Always do your research and double-check the laws that apply to your state and/or county.
- Be aware that, depending on where you live, many HOA’s can and will foreclose on your house for overdue fees. This will leave you with a mortgage payment on a house that you no longer own.
- Talk with the neighbors. You would be surprised of how much valuable information and assistance your neighbors or potential neighbors are willing to give you.
- Overdue Homeowners Association fees in the hundreds can quickly spiral into the thousands after attorney’s fees.
- Some Homeowners Associations divide the fees into 2 departments. They usually split up the general neighborhood fee and the pool or recreation center. Regardless of confusing this is you will have to pay both. I have seen people fall very far behind on their dues and threatened with a lien because they were unaware of this secondary HOA bill.
- Depending on where you live, if you are bidding on a house at auction, make sure you are not bidding on the Homeowners Associations junior lien. Many people have bid upwards of 100 thousand dollars on the junior lien of a house that they will typically only own for less than a year. However, this does not always apply to Nevada where the HOA lien can extinguish the bank lien.
- Depending on where you live, if you do lose your house to a Homeowners Associations foreclosure auction, you may be entitled to the surplus.