All homeowners are required to pay state, property and income taxes. But when you purchase a condominium, townhome or home in a gated community or subdivision governed by a homeowners association (HOA), you and other residents become equally financially responsible for maintaining the common areas. This additional monthly, quarterly or yearly fee is mandatory for all property owners and dedicated to maintaining clubhouses, parking garages and recreational facilities. These fees also cover the costs associated with landscaping, general maintenance and neighborhood security.

Every real estate purchase has its own set of risks and rewards. While HOA fees help maintain the quality of life for the community's residents and protect property values for all owners, considering the impact of an HOA on your long-term expenses is always in your best interest. Not only are Network Realtors well-versed on HOA fees and bylaws, Network Real Estate also is a leader in property management for the area, offering administrative services for more than 50 communities.

Research the financial health of the complex and how its HOA is governed.

HOAs are governed differently in each community. It is common for the association to be managed by building residents who fill the position as volunteers, but it is also common for many larger communities to hire full-time, on-site managers. Regardless of governance, examining an association budget carefully helps ensure a more positive and fulfilling community experience. An experienced Realtor can walk you through the terms and compare dues for the complex or neighborhood you are considering to the average dues in the area. The right monthly HOA fee pays for monthly operating costs and creates a reserve fund, a fund created for unexpected repairs to the property, which can cover 70 percent to 100 percent of anticipated major maintenance costs.

Remember, HOAs are mandatory homeowner dues. The association is permitted in North Carolina to take legal action if your dues are not paid.  

Fees may rise the next year if management depletes its reserves.

All communities will eventually require large expenditures to maintain the integrity of the property. Your HOA typically has the money to pay for these capital items from the accumulation of the reserves, but the scope of the project may require additional resources. A reserve fund may not even exist. Special assessments – additional money required for a project or outstanding debt that was not a part of the budgeted HOA fee – can be very expensive and an unanticipated financial burden.

There is the potential for fines if you don’t follow the rules outlined in your community’s HOA.

Almost all associations use fines to some extent to address violations of their governing documents. Adhere to the governing bylaws and you will not incur additional fees.

Prospective buyers must realize that homeowners agree to comply with the covenants, constrictions and restrictions (CC&Rs) when they move into the community.

While intended to serve the community, CC&Rs may seem restrictive to some potential homebuyers. These rules can limit anything from what kind of improvements or alterations you can make to how many pets you can have. Others include a limitation on the colors you can paint your home and your selection of window coverings, decorations and mailboxes. At the same time, HOAs protect the property values of individual homeowners and work hard to create a great community environment. Before you purchase a property subject to HOA rules and fees, make sure you know exactly what you are getting into. North Carolina CC&Rs are publicly recorded deed restrictions, and a Network Realtor can walk you through the CC&Rs and bylaws to determine if these rules best match your temperament, lifestyle, interests and finances.

A great Realtor will prepare you with all of the information you need to make the best decision for you and your family. Owning a HOA-governed home certainly has its perks, and ensuring that it financially makes sense and fits your temperament and lifestyle is top priority. Network Real Estate’s Homeowner’s Association Management Division offers detailed management practices for multi-residence properties, and with more than 30 years in Wilmington real estate, we are confident that we can help you become one of our many satisfied customers.

Kevin McKoy is a GRI-certified, licensed real estate broker at Network Real Estate, which has exclusively served a high volume of property sales and purchases in the greater Wilmington area for over 30 years. With three offices at College Road, Historic Downtown and Pleasure Island, Network’s brokers are widespread and well-versed in this marketplace, making Network a preferred Real Estate company for first-home buyers and beyond.