Article Courtesy of The Huffington Post
By Jack Hanson
July 4, 2016
In January, a Florida family’s home was foreclosed on and
sold at auction by their Homeowners’ Association to collect overdue Association
fees amounting to $1,900.
In November, a homeowner in Idaho was ordered by his Association to remove his
Christmas decorations because they infringed on the rights of his non-Christian
Last March, another
Florida couple who suffered a brutal home invasion sued their
Association for not properly maintaining the fence around their
Roughly 66 million Americans live in common interest communities
such as Homeowners’ Associations, Condominium Associations,
retirement communities, vacation timeshares, and gated
subdivisions. When a common interest community, such as a gated
subdivision, is built, the developer is in control of all
aspects of the management of the neighborhood until 90% of the
houses are closed. Then the control and management is handed
over to the Association, which is the official membership of
residents and elected officials whose raison d’etre is to enact
and enforce provisions that protect the homeowners’ investments.
This protection occurs in the form of maintaining standards
which are specified in the Declaration of Covenants, Conditions
and Restrictions, or CC&Rs. They cover measures to protect both
quality of life and property values. These might include
reducing vehicular traffic through maintaining gates, addressing
water infrastructure management, and putting all kinds of
restrictions on everything you can imagine, from what colors a
house can be painted and where a pool can be built to where cars
can and cannot be parked and what kind of holiday decorations
can be put out and for how long... I’ve seen it all.
Since 1964, Associations
have become increasingly common in part because they give
residents a degree of control over their investment that
homeowners in non-Association communities do not have.
66 million Americans live in common interest communities
with governing bodies, such as Homeowners’ Associations and Condominium
Associations, designed to protect property values and quality of life.
But when HOAs or COAs are mismanaged, or homeowners have false
expectations, life behind the gates isn’t as hunky dory as it may look
from the outside.
But along with the benefits of enhanced control over their environment and their
property values can come problems, such as time consuming bureaucracy, legal
imbroglios, unexpected expenditures, and unmet expectations. Sometimes these
problems can be benign - you can’t fly the flag you want to over your front
door, you can’t put the jungle gym in your front yard - other times serious -
your home is auctioned off because of unpaid Association dues, an
Association-related lawsuit drags on for years and costs members a fortune.
Over the last two decades as the head of The Melrose Management Partnership, I
have managed, on behalf of well over a thousand Associations, over 200,000
dwellings in 500 communities, as well as overseen Melrose franchisees who manage
dozens of communities. I can tell you that Association-related problems such as
these can never be entirely avoided. However, a more informed homeowner can
prevent most of them.
Here’s the 411 on how to do just that:
Understand that once you’re in, you can’t get out of it: Buying a residence in a
community controlled by an Association is not a voluntary commitment. This is
not a “country club” membership that you can simply choose or not choose to
join. A review of your title policy will clearly state that you are taking title
to your home under the encumbrance of the Association. I will never forget a
resident calling me after she had received a deed violation notice. She stated,
“I quit, I don’t want to be a part of this Association.” Unfortunately for her,
she had no choice once she moved in, nor will those that come after her. So
understand that when buying into an Association, you are legally bound to its
conditions and restrictions.
Don’t skim over the CC&Rs: The CC&Rs state explicitly what, as a homeowner, you
will and will not be allowed to do so that there won’t be any confusion once
you’ve moved in. Read these carefully - they are tantamount to the Association’s
Bible. They explain the do’s and don’ts.
For instance, homeowners
in a community I manage wanted to put up a solid fence in their
backyard, only to find out—several deed violations and penalty
fees later—that the CC&Rs only allowed them to put up an open,
picket fence because their backyard overlooked a conservation
area that had to remain visible to the community.
Similarly, the CC&Rs may restrict dogs to under 30 pounds.
Reading them will save you the heartache of bringing home a
puppy for Christmas that quickly grows to 60 pounds only to
later find out that you have to get rid of the dog or move out.
It can happen. I have seen residents get fined for everything
from having too many potted plants to placing a ‘For Sale’ sign
in their own front yard.
Ask to see the
Association’s books: Before you buy, take a look at the
Association’s current financials to see what’s coming in, what’s
going out and what the reserves are like. The financial
condition of the Association should be an important and
significant factor in your decision to purchase your new home. .
Read the CC&Rs closely. It’s the only way you won’t find
out the hard way that the pooch you brought home for the kids has to go
back to the pound just because he’s over the HOA weight limit.
As a member of the Association, you will
be responsible, along with your neighbors, for any repairs and maintenance to
any and all common area elements. Should there be a shortfall, it could be
costly to you and your neighbors. Be aware that you could be special assessed if
the reserves are not properly funded.
Common property is your property, so make
sure the Association has insurance: If someone who is taking a
leisurely walk down a sidewalk trips and falls, they can sue the
Association. That’s because the Association is liable for
anything that happens on the community’s common property. If the
Association that governs the home you want to buy does not have
adequate insurance, then you and the other homeowners will be
liable for any lawsuits.
Don’t try to blow off your dues: If a
homeowner does not pay their Association dues, the Association
can enact all kinds of collection measures. These can range from
filing a suit against the homeowner, and, in some cases, even
foreclosing on the home to collect on them. Dues can (and often
do) increase as well, so don’t expect that the dues you pay when
you first buy will be the same five years hence.
You can also be fined for violations, usually
at something around $100 a day per violation, up to $1,000.
Understand this beforehand and you won’t have to pay $500 in
fees just for going out of town for a few days and leaving your
car parked by the curb.
Keep your expectations this side of great: Homeowners in
Association-managed communities, especially gated communities,
have all kinds of false expectations. For instance, gates do not
stop crime, they just limit vehicular traffic - and they don’t
stop criminals from walking around the fence or jumping over it.
If someone slips and falls by the community pool and sues
and the Association is not insured then you and your neighbors will be
held personally liable. So before you buy that dream house do your
homework and make sure the Association is covered.
Additionally, an Association cannot actually
stop your neighbor from painting their house pink: it can fine
them and penalize them and even foreclose on their home, but it
can’t stop them from doing it. Understand as well that if you
don’t comply with Association regulations you won’t just pay a
financial penalty, you will pay a social penalty when you find
you have become an outcast for not conforming to the dictates of
the community’s rules and regulations.
Notice there is no “I” in HOA or COA : This
is your property so you should be involved, which means
communicating with your fellow homeowners, attending meetings,
understanding the individual roles of the Board of Directors and
knowing the importance of effective management.
you are looking to buy a home within an HOA or COA, follow these
tenets and instead of falling into a quagmire of problems you
can benefit from the maintaining of property values and quality
of life standards that HOAs and COAs are actually there for...
and not have to move just because your German Shepherd outgrew
the Association’s weight limit.
One of the biggest misconceptions related to security in
HOA and COA managed communities is that gates stop crime. They don’t —
they just limit vehicular traffic.