Homeowners associations have been growing in popularity, and the groups aren’t limited just to the suburbs. They are present in the city, in privately-owned communities, subdivisions and condominiums. The name of the group may differ, but the goal is the same: manage the neighborhood’s common areas and maintain certain standards by means of regulations.
When these associations first emerged in the 1970s, they were voluntary. But since the 1980s, membership has become a mandatory condition of ownership in some communities. An estimated four out of five houses built since the late 1990s are governed by a homeowners association, according to the Community Association Institute, a national non-profit group that provides resources to such organizations. Yet few people really understand the risks and benefits.
Find out the rules in the fine print
The property developer typically establishes what services and expenses are to be covered by an association’s budget, its by-laws and the obligations of its members. The developer runs the association while the neighborhood is being completed and then turns control over to a committee of owners.
Most homeowners associations are not-for-profit corporations and employ professional property managers and lawyers to support the association. They regulate property use in the community through covenants, conditions and restrictions included in a home’s deed. These covenants and restrictions can set the color palate for home exteriors, dictate how often you must mow your lawn, how many cars you can park in your driveway, whether you can have pets, operate a home business or erect a flag pole, among other things.
While many homeowners like having a common code of behavior and standard of upkeep in their neighborhood, others find the restrictions intrusive. Becoming entangled in a lawsuit with a homeowners association could undermine the value of your property.
What’s covered
Before you buy a home regulated by an association, consider the following:
- Maintenance: Once a developer’s responsibility has expired, home owners assume responsibility for repairs to their home.
- Fees and assessments: Associations typically levy mandatory monthly fees to maintain common property, such as lawns, swimming pools, hiking trails, golf courses, tennis courts or lakeside docks. Fees may increase as expenses rise and special assessments may also be imposed for large projects such as a new roof for a community sports center or private street repair.
- Liens and foreclosures: If you fail to pay your association dues, or run afoul of its regulations, you likely will be charged a fine. A lien can even be imposed on your property resulting in potential foreclosure. If you dispute the charges in court and lose, you may also have to pay the association’s legal fees.
- Governance: Most homeowners association board members are volunteers elected by the property owners. Often, more than 50 percent of the dues collected by an association are used to pay for management companies and attorneys it employs.
- Regulations: Together with their management partners, homeowners associations function very much as private governments. Once property owners sign a contract agreeing to comply with an association’s laws, that often supersedes their individual property rights. It’s not easy to change community regulations imposed by a homeowners association. To do so generally requires the approval of the majority of members.
- Membership: Membership in a homeowners association may be voluntary or mandatory. Some voluntary associations attempt to become mandatory by implying new deed restrictions have been adopted. However, deeds cannot be amended without the express agreement of owners.
Read the rules before you buy
- If you’re considering buying a property regulated by an association, ask to see the covenants, conditions and restrictions before you make an offer. When you get them:
- Read them carefully to see if you will be comfortable complying.
- Find out how much and how often the board can raise fees and levy assessments.
- Ask to see the association’s financial records and review them with your lawyer.
- Talk to potential neighbors about past dealings with the association.
- Ask to meet with a board member to learn about the association and, if you become an owner, attend public meetings to keep up with the issues.
To learn about your rights as a home owner, check the declaration, certificate of incorporation, and bylaws of your association (which should be available from the board of directors or developer). Look at the laws governing homeowners associations in your area (not-for-profit corporation laws) and the decisions made by the courts in any cases involving your particular association.
Published on January 11, 2007