HOA Fees on Maui: Explained Homeowner associations have existed in the United States since the mid-20th century. They operate as non-profit organizations whose primary objectives are to organize, maintain and protect properties together with their owners within planned communities or subdivisions, condominium complexes and cooperative ownership arrangements. There are a wide variety of HOAs across the country, and specifically on Maui. Some HOAs may be very small, with only a few properties in the association, while others may involve thousands of homeowners. The most common type of HOA on Maui is a condominium community HOA. There are hundreds of condominium complexes on Maui, and their HOAs use the money they collect from owners to cover things like common area maintenance (landscaping, pool maintenance, etc.), home insurance, on-site property management, owner water use, shared utilities, reserves for future repairs, and association financial management. Why are HOA fees on Maui so expensive? Compared to condo communities or subdivisions on the mainland, Maui HOA fees may seem high at first glance. You will also notice that almost everything is more expensive on Maui. This means that everything an HOA on Maui uses and needs is more expensive. Some HOA fees are as low as $50 a month in neighborhoods where you’re really just paying to have rules, but no other services. Other HOAs can exceed $8,000 monthly in some of the most elite units in the most elite condo communities like Wailea Point or the Montage Residences in Kapalua. Many HOAs also use a third-party management company to help with administrative functions, and this also comes at a cost. Companies like Destination Maui and Hawaiiana manage several HOAs on Maui. Property values are also higher than the national average, and many coastal properties are subject to greater wear and tear than non-coastal properties. These factors lead to higher insurance premiums and replacement costs for building components such as roofing, walkways and elevators. HOAs for Single-Family Homes In single-family homes, HOA fees are generally much cheaper than in condominiums on Maui. Residential homeowners’ associations generally do not cover homeowner’s insurance or any utilities. Instead, they serve more to create and enforce community design standards, enforce certain rules of conduct to ensure quiet enjoyment for residents, and often maintain the neighborhood’s private road or gate. Why HOA’s Get a Bad Wrap (and Why They’re Not So Bad) View this post on Instagram A post shared by MisterMainer – Dmitry Pepper (@mistermainer1) Social media is full of hilarious examples of HOA presidents or members taking their jobs a little too seriously and creating unnecessary disputes with homeowners. Many people’s first visceral reaction to an HOA is to recoil at the offensive idea that someone else will tell you what you can and cannot do with your property. It’s understandable. Sometimes after 10 p.m. you just want to turn on some music or hang your clothes on the railing to dry. But the behavior that homeowners’ associations prohibit for you is also behavior that they prohibit for others, and is determined in a somewhat democratic manner. However, not all HOAs are well managed, and this is where most problems arise. Unnecessary expenses can arise if the board is unable, or simply unable, to make wise financial decisions. Corruption can occur when a board member makes an illegal deal with a contractor or other service provider; it’s rare on Maui, but I’ve seen it happen. Separating the good from the bad It is critical to have competent, reliable people running your association. Therefore, it is important that all members stay informed, participate in meetings and vote on important issues. It is also nice if the property manager answers the phone on site. Not something you can expect at every association. Most owners will assume that the board has their best interests in mind and will not concern themselves much with the internal operations. Others who eagerly participate and run for leadership positions often do thankless, but very necessary work for all members of their community. Anyway, if you’re in an HOA and don’t like what’s going on, you can always get more involved. What will your HOA fee cover on Maui? When you are under contract for a property managed by an HOA, you will receive the complete condominium association documents within the first 10 days of escrow as part of the M1 provision of the Hawaii purchase contract. This document set includes the CCRs (covenants, conditions and restrictions), recent and annual minutes of meetings, articles of association, a reserve study, bylaws, house rules and a description of what is included in the monthly fee. It is important to know exactly what the specific community does or does not cover, as this varies, even slightly, from apartment to apartment. This is another reason to make sure you work with an experienced buyer’s agent (cough, cough) who may already know about problems with the complex before you have to find out for yourself, and only once you’re under contract. What about reviews? This is the last word anyone wants to hear when buying, selling or owning property in an HOA. An appraisal usually adds additional costs and can cloud matters when negotiating a sales price, especially when the appraisal is currently just a whisper and the exact cost has yet to be determined. I’ve worked on many deals where the owners were currently paying an assessment or actively discussing a future assessment, and it can become difficult to come to an agreement on who pays what. Appraisals are used when the association does not have the reserves to cover a necessary repair project or a cash shortage. In most cases, higher assessments of more than 20,000 euros per owner ensure that owners can pay in installments, thus reducing the burden. The Montage Residences recently received a 400,000 assessment per owner for repairs to the exterior of the building due to chipping of the stucco. Appraisals can also impact short-term rental income. In the Montage’s case, each building was closed for six months for construction, meaning each of these owners lost six months of rental income while still having to pay their full property taxes and HOA fees. How do you negotiate a valuation when purchasing? As a buyer, it is best to always include in the purchase agreement that the seller will pay for any ongoing appraisals and/or loss of use. If a future review is in the offing, it is important to track down the right board member to at least get an idea of the expected costs. They are usually reluctant to give an estimate, but we have to insist. You will also receive a communication from the association as part of the contingency review of the association document. This disclosure, known as RR105c, contains a specific section on ratings. So if the owner has their head in the sand and wasn’t aware of an upcoming review, the RR105C will make sure they are. Do you have questions about a specific HOA on Maui? Having worked on a wide variety of properties on the island, I have encountered a variety of HOA issues and have access to up-to-date information on almost all of them. If you are interested in a specific community’s HOA policies, potential issues, or are just curious about what the HOA covers in that complex or neighborhood, feel free to email me at evan@mauieliteproperty.com or call me at 808-214-4799. form-contact
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