| Virtually everyone has heard some horror story about homeowners associations. A woman buys her dream home in an immaculate neighborhood that also has a homeowners association. Six months later, she gets a puppy and plans to build a dog run.
What comes next is a seemingly endless headache as the woman runs into one frustration after another when the architectural review committee of her association continually rejects one design after another for the planned pooch domicile. She eventually gives up, and gives away the puppy to friends, before putting her own house up for sale.
More common, perhaps, are problems for residents who want to paint their houses certain colors. Perhaps one man wants to paint his front door forest green, only to be told "Sorry" by the association. It seems two other residents already have dibs on that color.
Nearly 50 million Americans currently live in housing governed by some form of homeowners association. In western states, it's almost impossible to find a new home without an association and restrictive covenants. A number of these HOAs are getting some bad press these days. Some are even being sued by surprised owners, outraged about admonitions on anything from the color of their kids' swing-set to their proposal to operate an in-home business.
Several web sites have sprung up in the past few years to warn home buyers and to function as resources and bulletin boards for frustrated home owners. A common protest appears to be the perceived abuse of power by clipboard-wielding board members. In southwestern states, some real estate classifieds have actually been known to boast "No HOA."
Real estate experts, on the other hand, are quick to point out the benefits of homeowners associations. After all, who wants to look at a wrecked car, or a motorless RV parked next door for six months.
HOA rules and the covenants that accompany life in an HOA neighborhood are in place to protect the value of the neighborhood's properties and the community. Neighborhoods with properly enforced covenants are not only visually appealing, but they have been shown to operate more safely, retain property values better and foster a stronger relationship with local government than those without.
But not all human beings do well with strict rules and regimented lives. A recent survey, however, found that one-third of HOA buyer respondents were not aware of many restrictions until after they had moved in. This points out the need for buyers to make themselves more aware, to do proper research of what may be their new HOAs before they complete their purchases.
Getting a good grasp on all the covenants, conditions and restrictions, or "CC&Rs," that accompany purchasing a home—especially one with an HOA—means spending time poring over documents. All HOAs have different people running them, and different people who set them up, so their impacts on residents will also be different. Some are more authoritarian than others. The best associations make communication with homeowners a top priority, some even going so far as to publish web sites for their members.
Buyers should start at their local city or county planning department, asking to review all governmental restrictions on the property they want to buy. They also need to read the CC&Rs created by the subdivision's developer, plus any prior-imposed deed restrictions.
Those people buying in an HOA neighborhood also need to ask for copies of the HOA's Bylaws and Articles of Incorporation, as well as for financial records and minutes of board of directors meetings, if available. Some things to think about while reading over this material:
- What is the election process and accountability procedure for the board of directors?
- Does an outside firm audit the books?
- Are there any big-ticket maintenance projects pending?
- Is there a pattern of upset residents, or just one cranky busybody?
A savvy home buyer will take the time to go to the courthouse to look up current or past lawsuits naming the association. These legal actions are a matter of public record, and any documents filed with the court are open to review by the general public, usually at no charge.
Finally, for those who choose to buy in an HOA neighborhood, remember that the association's governance will be only as good as the people involved in it. Those who aren't happy with their HOA's governance should get more involved and do something about it. |
