Homeowners' Associations (HOAs) and CC&Rs: Know What You're Getting Into

When you buy a home in a new subdivision, a common interest development (CID), a planned unit development (PUD), or a co-op, chances are good that you also automatically become a member of an exclusive club. It's often called the homeowners' association, or HOA.

What is an HOA? It's not a faceless entity: its members will include all the people who own homes in the same development. It will, however, probably exercise a lot of control over how you use your property.

Everyday administration and enforcement will be carried out by whichever of your neighbors joins the HOA board. Maybe you'll even decide to serve on the HOA board yourself! Nevertheless, the board members will have to follow some strict rules.

This article will explain how an HOA's written rules and community structure play out and how they will affect you as a homeowner.

Why You'll Be Legally Bound by HOA Community Rules

Buying a home in a development is different than buying a regular home, both legally and practically. Even what you literally own will be different. You will probably own the actual structure of your house (except with a co-op, where you own only shares in the corporation that owns the property). You might or might not own the land underneath your structure. You will also own a share of "common areas," such as sidewalks, a community recreation center, and a gym.

The short of it is, you will be literally buying into a community, which comes with various rights and obligations. To reflect this unique mode of ownership, your paperwork will include a transfer deed, which will not only show you as the new owner, but will also set forth limitations on how your property can be used. These limitations are often called covenants, conditions, and restrictions, or CC&Rs.

Types of CC&R Rules Your Homeowners' Associations Might Have

Expect your community rules to cover all or many of the following parts of your property, or your behavior when living on that property or remodeling it:

• types of shingles and exterior paint you can use (often neutral brown or gray)
• types of fences, hedges, trees, or plants you can have
• your maintenance of lawns and weeds
• your use (and any guests' use) of a swimming pool or other common-area facilities
• whether you can rent out your home or unit
• whether you can install swing sets, basketball hoops, and so on
• what you can do with your garage or shed
• what type of mailbox you can have
• whether you can put up a clothesline
• whether you can install outdoor lights (or what type) and satellite dishes
• types of window coverings you can put up (possibly only white)
• whether you can display wreaths, holiday lights, flags, and so on
• whether you can operate a home business
• size or even acceptability of dogs, cats, birds, and other pets
• when and to what degree you can hold parties or make noise
• whether you can enlarge your house, and
• the degree to which you can obstruct other owners' views.

Obviously, you'll want to read the CC&Rs carefully before you buy. Even if the house's setting and location are perfect, and the model home (if construction hasn't yet occurred) or already built home is just what you want, you'll want to make sure the CC&Rs are compatible with your lifestyle and future plans.

If you don't understand something in the CC&Rs, ask the property sellers for more information, and seek legal advice if necessary.

How Strictly Will the CC&Rs Be Enforced?

The governing boards of some associations enforce every rule with no room for leeway. Others are run in a more relaxed fashion. Enforcement depends largely on the personalities of those who decide to serve on the board, and their sense of how important it might be to, for example, insist that a neighbor replace curtains that don't quite fit the required color palette.

Most responsible associations try to make decisions that will enhance the value of the houses. That is, after all, the purpose of having CC&Rs: to provide standards that the community agrees to live by, for the benefit of all owners.

Getting relief from portions of your CC&Rs that feel overly restrictive isn't easy. You'll likely have to submit an application (with a fee) for a variance, get your neighbors' permission, and possibly go through a formal hearing.

Also be prepared for the board to add new rules even after you move in!

And if you want to make a structural change to your house, such as building a fence or adding a room, you'll likely need formal permission from the association (on top of having to comply with city zoning rules).

You'll Save on Maintenance, But Pay Regular Fees

One of the main reasons people buy into a development is to avoid some of the maintenance that comes with regular homeownership. Tasks like landscaping and snow removal will likely be handled by the HOA. If there's a pool or recreational facility, it won't be up to individual homeowners to clean it.

However, homeowners' associations normally require members to pay fees for common property maintenance (and for insurance in case of damage), another practice expressly permitted by the CC&Rs. The fees are often in the several hundreds of dollars per month; like paying rent on top of a mortgage. Fees tend to run particularly high in developments with a pool, golf course, or other recreational facility.

Many HOA's rules let their boards raise regular assessments, usually up to 20% per year, and levy additional special assessments with no membership vote for capital improvements like a new roof. What's more, a responsible HOA will always set aside some cash reserves, for unexpected expenses or emergencies.

If you're on a tight budget, check the HOA fees and how easy it is for the board to increase them. Also, if parts of the development have been occupied for a while, attend a homeowners' association board meeting and talk with the officers about their financing, any ongoing legal disputes or repair issues, and other issues of concern. See these FAQs for more information on HOA fees.

For further information on how to find the right type of home to buy, see Nolo's Essential Guide to Buying Your First Home, by Ilona Bray, Ann O'Connell, and Marcia Stewart (Nolo).