https://youtu.be/wTqXMh1CpRYPeople move into condo communities for a variety of reasons. Amazing cities, simple, easy life, you can lock up and you can leave and go somewhere else and people still mow the lawn for you. But there are also reasons that condos can be nightmares. So stay tuned to make sure that you know how not risk your investment and lose thousands of dollars, just by buying into an HOA community. Hi, I’m Rhonda w/Comey & Shepherd, and I've been selling real estate in this area for about 10 years, and because I have lived in a town home and been part of a condo association, I end up selling a lot of condos, especially here in Mason. So we are gonna jump into what you need to look out for. Part of the reason that chose this community was, I used to live here for 16 years, and loved it. It was gorgeous, that’s not to say, we didn't have some issues with the HOA, but currently, there's someone that has a listing on the market that has very specific language in their marketing remarks. And I want to read it to you.  These marketing remarks state very clearly. Nestled in this highly regulated community in Mason, OH. This move in ready townhome at XYZ is governed by, and exceptionally diligent HOA that enforces a comprehensive 54 page handle detailing strict rules, regulations, including significant fines, and levies for non-compliance.  Prospective buyers are urgently advised to meticulously review that HOA handbook to fully grasp the stringent expectations and obligations of living in this tightly managed neighborhood.  For a copy of this handbook and additional details, contact the listing agent. It sounds like somebody found out the hard way that HOA documents do matter, and why I'm reading this is because as an agent, I want you to know what you're getting into. I want you to read the documents. You need to know more than just the handbook.

I have a story that you're love, it happened to be in a neighborhood very nearby, you could see these neighborhoods from each other, but once upon a time, I had a listing.  It was a great property. I was so excited to have this listing because it's an awesome area. They were still building, but great townhouse. And we had an interested buyer. The buyer asked for the HOA docs. We sent them over, the next thing we know, they have no interest. In the HOA docs, it's stated very clearly that you can only have two pets, and they could not be more than 50 pounds of each. Well, apparently, those buyers had two golden retrievers, and my sellar was extremely confused by this because his neighbors, somewhere in the community, had two Great Pyrenees, which are easily over 100 pounds each. So we explained that to the buyers and they would not do anything. We talked to the builder who said, this is just boiler plate language, this is what we use for all of our communities, because we do have some stacked condos as well. The HOA. I believe that we asked for an exception. Could we get a letter of exception for these buyers? They wanted to buy the condo? No, we could not get that. So I think there's two very important lessons to take away for this story. Now, number one, the buyers could have bought the condo, they could have moved in, everything could have been fine. Or the neighbors could have decided to report them to the HOA, and if the HOA would have decided to levy fines or ask them to remove their dogs, you know, those fines add up, they will keep sending you letters, they will keep adding interest to those fines until something gets settled. You may also be responsible for your legal fees and the HOA legal fees. So, really no shock that a buyer wouldn't want to put themselves in this type of position. But I think the second point is really a wake up call for sellers. My seller ended up selling for $20,000 less than what he would have sold for and it took him three months longer. All for something that was possibly nothing, but no one wanted to deal with that because everyone wants the right, the HOA boards always want the right to get rid of a situation that people aren't happy with. And everyone has different thoughts about the rules in their communities. Make sure you know what those rules are before you buy. I would also highlight anything that seems unusual, like you can't keep your car parked in the driveway for any length of time. It should always be parked in the garage, and the garage door should be down when not in use. It might be something as simple as you're not supposed to have more than three garden ornaments in your front garden. And you think, who cares about that? And then you walk past somebody's house who has like 50 little woodland creatures out front and you go, oh, yeah. Okay, I see why someone made that rule.

I have a buyer that actually was looking at condos this past summer/fall, and we found one. We got into contract. We had some HOA docs, but we didn't have the financials. So we started asking for the financials and things started getting weird. Like, we were getting partial things. We were not getting full answers. We were not getting full documents. And my buyer had actually been on an HOA board previously, so he knew what to ask for. He knew what questions to ask. He knew what he was looking for, even the management company was just kind of pushing back a little bit. Well, finally, he called them directly and found out that well, he did get some documents and then confirmed his suspicions when he spoke with the HOA management company, which was, they were losing money every month. The reserves were going down, there were some negative numbers on the financials, and then they had just taken out the $600,000 line of credit. Now they hadn't used that much of it, but they also had to do siding.  Even though they had just finished a project doing Blacktop on the entire parking lot, this next project was probably going to be even more expensive. So, you know, he was just a little overwhelmed. And then the management company, to top it off, let him know that HOA fees would be going up $70 per month in January. Needless to say, he didn't buy that condo, nor do I blame him. That could have been a huge mess going down the road. I just see assessments written all over that. And so just make sure that anytime that you are interested in a condo, yes, we want those dos and donts, regulations, and then we want financials. We also want meeting minutes.

But I think the worst situation that I have seen so far, and I'm probably not going to get all the details right, but let me just kind of run you through what I do know. Really cute community, cedar sided buildings, very contemporary, super cute in a neighboring community from where I am right now. These folks had some issues with the land that was on the back part of the community. There were three story decks on the backs of these buildings and the ground was starting to give way. So they had to reinforce that. They had to take out a loan to make that happen. because there were only like 60 units in this community. Even at 325 a pop, that's just not a ton of money every month. You're not going to cover that big expense of reinforcement. So they ended up raising HOA fees. They were in like the 400s. Well, all the siding was starting to go. So then they went up to the 600s, and then there was something else that came up and now, I mean, they even they started down a path where they were going to put vinyl siding on everything, which maybe, I don't know, maybe that would fixed it, but then they reversed course as they got new HOA board members because I believe that the previous board had some family members that were all on the board, which was a little tricky. So they've gone in several different directions and now HOA fees, last I saw, they were like eight and $900 a month range. That puts you in a position where A) your property is not going to increase in value. B) most people can't finance that because those HOA fees have to be part of your payment. So for most people looking at that say, 250 to $350 price range are going, “oh an extra thousand dollars a month in HOA fees”.  Like how do you make that work? You know, but the other part of that is basically, you just are stuck with a home that you can't sell. Now that you have $800 or more a month fees and your asset isn't actually going to increase in value because no one could probably afford to buy it nor would they want to. You're stuck. What if you need to move? I don't know if you can rent that out. Reasons that HOAs go broke--Owners don't attend meetings. Nobody reads the budgets. The same three people are on the board every year. Also, deferred maintenance piles up. Just know that HOAs do not collapse over one bad year. It collapses because nobody paid attention for 10 years. So make sure before you buy in, that you review all of the documents. 

You want to look at those reserves.

You want to look at any open loans and what's going on with those.

You also want to check out delinquencies if you can.

Are there any pending lawsuits?

Special assessments that might be coming and then also insurance coverage.  

The moral of the stories here today is to make sure that if you are buying into any HOA community, you pay attention, you ask a lot of questions and you read the documents yourself. I can read them, but I don't know what's important to you so it makes sense that you review all of those. There's a place in the contract where you have so many days to do that, but I just want everybody to understand that this is not something that you want to mess around with. You do not want to lose your property because you didn't know or no one told you. It's the Buyers responsibility.