Pros and Cons of HOA's in Park City
December 4, 2019
I hear often from my clients “ I don’t want to pay HOA fees” or “I want to pay as low as possible for HOA fees”.
This is my response: Why? Add up the following expenses and evaluate the amount before you jump to the conclusion that you are throwing your money away. Most of these items are covered by your HOA fees, especially in condos:
1. Basic cable TV
3. Snow removal
8. Common area pool and hot tub
Some HOA fees even include gas and electric. Now, after adding up all those fees, does $500-$700/month sound so terrible? Probably not. If the HOA is well run, then the fees are worth it. But the keyword here is IF. This is where a buyer MUST perform his/her due diligence, giving plenty of time before the deadline. If you miss the due diligence deadline, the earnest money becomes non-refundable.
When you receive the disclosure packet, the first step is to read the HOA budget and meeting minutes. The second step is, without fail, calling the head of the HOA. Ask about any upcoming assessments, when and if a reserve study was completed and the results of that study. Also be sure to ask how many people are in default for not paying HOA dues (usually not notable in good economic times), and if there is anything else you should be made aware of that may cause concern. Also remember to be realistic as there is no HOA on the planet that is perfect.
As for wanting to pay low HOA fees compared to other developments, I highly recommend you re-think that notion. If the HOA fees are too low, and have been for years, that usually means deferred maintenance and big assessments are coming at some point. What happens is that owners get on the HOA board and want to keep HOA fees as low as possible. Then there isn’t enough money for ongoing more expensive maintenance, and the next thing you know, bam, the roof starts to leak or some other major maintenance event. This is due due there not being money in the reserves to cover the expenses due to years of low HOA fees. Bam again, here comes the assessment.
Moral of the story: a well run HOA is a good thing and protects your investment. As the old adage says “you get what you pay for”. Do your homework, read the disclosures and follow up with a phone call to the head of the HOA.
For more pro tips on HOA’s give me a call. I have served on two HOA boards and serve on one currently.