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, you normally become a member of what's often called the homeowners' association, or HOA. It's usually automatic, but that doesn't mean you can ignore it. Let's take a closer look at what an HOA is and how its administration and rule-enforcement efforts will impact your life in your new community.

What Is an HOA?

An HOA is not a faceless entity. After the early days of a development's construction, when people have moved into the community, the HOA will ordinarily be composed of you, your neighbors who own homes in the same development, and whichever of you decide to take on leadership roles there.

The HOA will nevertheless exercise a great deal of control over how you use your property; and perhaps not always in ways you appreciate. What's more, the very safety and quality of your property depend on the HOA coming together and agreeing on how to guard against problems and prepare for the future.

The June, 2021 collapse of a Florida condo building provides a tragic example of what happens when HOA members cannot agree on matters concerning maintenance and upkeep. News reports said the president of the HOA board was concerned about structural problems laid out in a 2018 inspection report, but repairs were estimated to likely cost over $15 million. This led to debate among condo owners, many of whom were reluctant to foot a portion of this huge bill. Unfortunately, they had less time than they thought in which to debate and plan, and many died in the disaster.

At a more everyday level, you and every property owner in your community will need to abide by various written HOA rules, as discussed below. The HOA board will be responsible for enforcing those rules and otherwise managing and overseeing community finances (including collecting regular dues), repairs and upkeep, and so on.

You'll want to decide whether to let others be in charge of important aspects of your life or to serve on the HOA board yourself. Serving on the board has the advantage that, if the time comes when you wish to voice a concern or request an exception, you'll already be known and trusted within the community.

But Isn't My Property My Own? So Why Must I Be Bound by HOA 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 if you purchase a co-op, in which case you will 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, a golf course, 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.

What Types of Rules Might an HOA Impose on Members?

Expect your CC&Rs and other 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. Examples include:

• types of shingles and exterior paint you can use (often neutral brown or gray)
• types of fences, hedges, trees, or plants you can have
• required maintenance of landscaping and lawns, and requirements for weed removal
• your use (and any guests' use) of a swimming pool or other common-area facilities
• whether you can rent out your home or unit, and if you can, what sort of "For Rent" sign you can display
• whether you can install swing sets, basketball hoops, and so on
• whether you can use an outdoor barbecue grill other than one in the common area, and if so, with what type of flame
• 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), antennae, satellite dishes, or other external fixtures; and how many screws you can put into the exterior walls to do so!
• 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.

In some situations, particularly aesthetic ones, the CC&Rs might not set out actual guidelines, but might make your plans subject to approval by the HOA board. An example might be what type of changes to your front-yard landscaping you can make. And more broadly speaking, the CC&Rs might prohibit property owners from creating nuisances or annoyances (such as with barking dogs, loud music, or constant barbecues), which the board will likely also weigh in on.

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). Don't count on getting around the issue of needing extra space by bringing in a boat, RV, or tent, either; it's likely to be prohibited as a living space, if you're allowed to park it on the property at all.

How Do I Find Out What's in the CC&Rs Before Buying?

You'll definitely want to read the CC&Rs and other relevant documents carefully before you buy. Fortunately, state law and real estate practice normally requires that prospective buyers receive a copy of the CC&Rs and other documents before finalizing the sale.

Remember, even if the house's setting and location are just what you want, and the model home (if construction hasn't yet been completed) or already-built home look to be perfect, if the CC&Rs aren't compatible with your lifestyle and future plans, this might not be the place for you.

What if, for example, you'd like to consider having another child, in which case you'd need to add a room; but the CC&Rs prohibit expanding the house? Or what if you are considering taking a sabbatical abroad in a couple of years, but the CC&Rs prohibit renting out your unit, and you can't afford to live elsewhere while paying ongoing community dues?

If you don't understand something in the CC&Rs (or the whole document looks like legalese and gobbledygook), ask the property sellers for more information, and seek legal advice if necessary.

How Strictly Will the Community's CC&Rs Be Enforced?

The governing boards of some associations enforce every rule on the books, with no room for leeway. Others are run in a more relaxed fashion. Enforcement depends largely on the personalities of the people 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. You won't have to worry about issues like a neighbor parking three rusting, dead cars in the driveway.

Then again, HOA board members are people, and it's not unheard of for them to play favorites, use bad judgment, or become apathetic and refuse to make a decision. (In fact, you might want to read about How to Remove an HOA Board Member.)

Can I Get the HOA to Change Rules I Don't Like?

Getting relief from portions of your CC&Rs that feel overly restrictive is not easy. You would most likely want to first ask for an exception, rather than an out-and-out rule change. That normally means submitting an application (with a fee) for a variance, getting your neighbors' permission, and possibly going through a formal hearing before the board.

In order to change the rules themselves, you would need to follow procedures set forth in the HOA's governing documents, most likely the bylaws. This also is most likely to work if you have a good deal of community support; particularly if the bylaws actually require a majority vote by both the board and community membership before changing the rules, as is common. Also realize that the HOA will need to make sure the new rule doesn't run afoul of any state laws governing HOAs; which might take time, and require hiring an attorney to research.

By the same token, you'll need to be prepared for the board to add new rules even after you move in! You might or might be grandfathered in, if you were "breaking" this rule already, prior to the change.

Will I Save Money on Maintenance?

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, snow removal, repainting of the exterior, and fence, roof, or furnace repair will likely be handled by the HOA. If there's a pool, community room, clubhouse, 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. You'll find out the current monthly fee amounts when you buy in, but the future is less predictable.

How Much Should I Expect to Pay in HOA Dues and Assessments?

HOA fees are often in the several hundreds of dollars per month. It's much 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 are on a tight budget, check the HOA fees before buying in. Also look into how easy it is for the board to increase the fees. See these FAQs for more information on HOA fees.

How Do I Know the Community Won't Run Into Financial Trouble?

When you buy into a common interest community, your financial future becomes somewhat intertwined with that of your fellow owners. In the event of a major economic downturn, your neighbors might actually stop paying their HOA fees, to the point where their properties are foreclosed on and perhaps sit empty. Other people might not want to buy into the community if they see that the entire thing is underfunded and spiraling downward.

While major crises like these are rare, you'll want to do your research, and be alert to the possibility of financial or legal trouble.

If parts of the development you are considering have already been occupied for a while, one way to do your research is to attend an HOA board meeting to hear what's on owners' minds and what's big on the agenda. Talk with the HOA officers about financing, any ongoing legal disputes or repair issues, and other issues of concern.

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).