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HOA governed homeowners – Is there a difference for cash deals?

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What is an HOA?

A Homeowners’ Association is an entity that sets and enforces a set of rules for a subdivision, planned community, townhouse complex, or multifamily building (to name a few categories). In all cases, the relevant residents elect a board of directors responsible for creating harmony within HOA regulations. The board’s duties include:

  • Managing the finances.
  • Conducting business affairs.
  • Ensuring residents stay compliant.
  • Establishing an acceptable standard of maintenance.

An HOA example

Let’s look at a condominium building with a hundred units in it:

  • The condo owners appoint four or five of their peers in the building to function as the HOA board.
  • State HOA laws can be demanding, requiring adherence to strict protocols.
  • Aside from the residences, the building includes a swimming pool, three tennis courts, and a medium-sized health club.
  • Condo owners contribute $1300 monthly to the HOA to cover maintenance of the common interests – pool, deck, gymnasium, courts, building conditions, insurance, and more.
  • In many cases, events require a special assessment. The board may earmark the latter for:
    • Refurbishing the lobby,
    • Buying more gym equipment,
    • Repairing structures.
    • Transforming units to hurricane protection windows.
    • Indeed, any number of things.

Moreover, efficient HOAs build up reserves for building depreciation, roof replacements, renovations, and air conditioning/elevator replacement – items uncovered by the monthly cash flows. Suppose a unique event arrives and the coffers are light on essential funding. In that case, the board may require every homeowner to chip in (failing which it may apply for a lien on the defaulting homeowner’s property). Aside from this, some rules circle back to color themes, booking tennis courts, keeping the gym equipment clean, and rights to community facilities.

Of course, things go further: The HOA may require every new homeowner buying a condo in the building to pay a one-time membership fee (say $5000). In addition, when an HOA disallows leases or, perhaps, only one annual rental, it’s a substantial disruption to a condo buyer who wants to rent out.

HOA coverage can range from “low intrusion” to significantly “intense.”

“Intense” usually connects to country clubs with rolling golf courses and a score of tennis courts. Accordingly, it may embrace restaurants, tropical gardens, tight security at guarded gates, and patrol cars. It may also have to maintain many lakes, children’s playgrounds, and internal roads. Reserves may cover restaurant losses as a cost of having them conveniently on HOA premises. Also, the HOA may have rights of admission regarding who can and can’t join the community.

So, what does this mean for an HOA homeowner or cash buyer?

When homeowners in community situations want to sell via a realtor or directly to a cash buyer, the HOA terms and conditions have to emerge for a smooth selling outcome. Neglecting to declare the HOA governance and spell out what it entails can collapse a deal that otherwise looks attractive. Likewise, cash buyers investing to rent may find the rules entirely untenable. They may also feel that HOA’s financial resilience is suspect if reserves are too shallow.

HOA governed homeowners selling to home cash buyers.

A non-HOA community home is a significantly easier sales proposition from the above descriptions. You can get an offer in your hands within forty-eight hours and close within a week. There’s no need to worry about curb appeal, decluttering, renovations, and staging. Home inspections occur before the home cash buyer offers a no-loan-attached deal. Sweeteners include no realtor commissions payable (i.e., a six percent saving). Moreover, a property appraisal can’t apply a brake on proceedings without a lender in the mix (i.e., a cash deal).

You may ask, “Won’t an HOA seller qualify for all that in the same way as a traditional single-family house?” The answer is yes, you’re right. However, the HOA piece of the jigsaw puzzle can derail the process in many ways.

  • Home cash buyers must review the HOA documents and financial statements.
  • They must go into the health of the organization’s reserves and assess if any restrictions interfere with the acquisition goals.
  • It’s also crucial to ascertain there are HOA liens on the targeted home (a potentially expensive issue).
  • In short, the review process can slow things significantly until there’s clarity on everything. The one-week closing is a stretch but not impossible.


Companies like Home Buyers Birmingham (Alabama) have been around for years with diverse experiences in every market segment, including HOA properties. Nothing phases them. Indeed, there are real estate opportunities under HOA jurisdiction that meet Birmingham’s goals precisely (e.g., they allow numerous rentals in a year). So, if you’re an Alabama resident, give them a call if you have a townhouse, HOA S-F, or condo to sell. This company helps couples involved in divorce, families dealing with complex inheritance matters, and homes loaded with debt and internal disrepair. They’ll assist you in getting the best deal possible given stressful circumstances. Moreover, they’ll pay top dollar for HOA or non-HOA properties in pristine condition.

Home Buyers Birmingham
1821 11th Avenue South Suite #55331
Birmingham, Alabama 35205

HOA governed homeowners - Is there a difference for cash deals?

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