What is an HOA and what does it mean to buy a Home in an HOA or coveted community? One unique trait of buying a home in the Vail Valley is that most properties are in one or more neighborhood associations, homeowners associations, or metro districts. Often properties can be in more than one of these communities and many people don’t fully understand them. A common interest community is often called an “HOA” and is an organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties in its jurisdiction and is typically formed by a developer. Think of it as a town within a town. You should understand a little bit more about HOAs if you are buying real estate in the Vail Valley so that you can make an educated choice that fits your lifestyle.
If you are a highly autonomous person that are willing to forgo continuity than have anyone be able to dictate your property use then you likely are best in an unincorporated area in the county that is not in any sort of metro district or HOA. Keep in mind there is not a lot of property in the Valley that fits into this category. You can also be willing to live in a Town but that is not otherwise in an HOA so that you have less “oversight” from outside forces. However, being able to do what you want can come at a price because if you can do what you want then your neighbors can as well and you may not appreciate what your neighbors do to their home and how it impacts your home. Unappealing paint colors, poor maintenance, trailers, and other “junk” can impact the neighbors and the property values and this is why many people choose to live in an HOA or a coveted neighborhood where rules are enforced and often certain areas are maintained by the HOA. Given that most people prefer to have the neighborhood look nice and keep things well-maintained HOAs and metro districts are often a very positive thing. Of course how positive depends upon the health of the HOA.
Another great benefit of a good HOA is for people who don’t wish to handle their maintenance (particularly on the exterior). Every HOA is different but many HOA’s are set up to handle exterior maintenance to varying degrees by the HOA. This means less for you to do. Many second homeowners find it convenient to live in an HOA that has strict rules about architectural design that helps preserve the continuity and aesthetic of the neighborhood and also provides things like landscaping, exterior painting, light changes, snow removal etcetera. A more turnkey lifestyle is often a great thing when owning multiple homes.
You must buy into an HOA or community with a good reputation both for being harmonious and for being financially stable. Although I don’t think reserves must be fully funded in many cases, the management and Board must be very upfront about future expenses and what savings are taking place through reserves or not. It is one thing to have a special assessment that is likely to come up and be aware that it will happen but it is quite another for the owners to be unaware of impending substantial expenses that are underfunded. This will inevitably create a lack of harmony within the homeowners. Keep in mind that smaller associations often will not invest as much time and effort in planning as it can end up being unreasonably expensive to do so if a complex has only a handful of properties within. Make sure your broker is knowledgeable and ask them questions about what they know and think about a certain complex or HOA. Ask about its reputation. Have your broker ask around for you.
Once you are under contract to purchase a home call and talk to management and try to read between the lines on questions you ask. Is the management organized and responsive? These are all ways to make sure that you are not walking into a difficult HOA that you may later regret. The HOA should readily provide organized information about the HOA (usually by website) so that you can review the financials, the reserve study, prior minutes etcetera. This type of analysis typically takes place after you are under contract to purchase and your Realtor should provide adequate time for you to do your “due diligence” and review the HOA so that you can terminate the contract and receive a full refund of your earnest money should you determine that you don’t like what you find. This added effort up front can save you a lot of heartache down the road. If there is about to be a special assessment to replace the roofs in a complex and the cost is high, this is something you want to know and factor into what you are willing to pay for the property.
