HOMEOWNER ASSOCIATIONS: A Nightmare or a Dream Come True?
~ ~ I invite you to print this information (it will print out in two pages). Use it as a check list to help you as you look for a home.
DON'T RUSH TO BUY ...
... a home based just on the excitement of your emotions. If the community has a homeowner association and mandatory dues, there are some mundane, but necessary, chores that you need perform to assure you will remain happy in your new home. ~ ~ If the homes in the community are attached (condominiums and townhomes) you can bet there is a homeowner association and mandatory dues, but these can also exist in communities with single-family, detached homes.
1) Never be swayed by a salesperson’s verbal statements. Ask for a summary of the protective covenants that are restrictions on the deed and a legible copy of the complete set of the governing documents. Legible is a key word. Many times the documents have been copied so many times that very few words are actually legible. If you don’t receive everything you need, don’t even consider buying in that community.
2) Even if it appears to be a single-family, detached home with no protective covenants or amenity fees, don’t assume. Check it out. Knock on some doors and ask the homeowners if there are covenants and/or fees in the community. Ask if there is a mandatory HOA. If so, there are more questions to ask. Do this vital bit of homework before you sign the contract to buy.
THE COMMUNITY DOCUMENTS:
1) If the documents are lengthy and confusing – this is no time to skimp – get professional help from an attorney who deals specifically with communities with HOAs (homeowner associations).
2) What restrictive rules are recorded on the deeds of the community (this is usually in the document called the Declaration)?
3) Does the community reflect pride of ownership? ~ ~ BEWARE! Among others that can make your life miserable, restrictions on some deeds give the Association, the Board, and the Managing Agent the right to enter homes as may be necessary or appropriate. The wording in some such rules is ambiguous and allows abuse. ~ ~ Some documents say homeowners are not allowed to put a for-sale or for-rent sign even in their own windows.
4) The restrictive rules on the deed can only be modified within the provision recorded for modification. What exact procedure is in the provision for modification? ~ ~ BEWARE! Some rules and restrictions can be only be modified with "no less than 100% approval of the lenders". That provision negates modification – 100% lender approval just doesn’t happen. ~ ~ There’s a 3,000-unit complex in Denver, built in the 1960s and 1970s, with absolutely no provision for ever modifying one rule. An attorney told me the only hope for that complex to ever modernize their DECs (declarations) would be to get all the lenders and homeowners to vote for specific changes. The apathetic, status-quo syndrome would preclude such a major event.
~ ~ YOU NEED TO KNOW AND UNDERSTAND EVERY RECORDED RESTRICTIVE RULE AND THE LIKELIHOOD OF LATER MODIFICATION OF ARCHAIC RULES.
1) How much are the dues?
2) What are the provisions in the community’s documents to increase the dues?
3) How do the dues compare with the dues in other communities?
4) What services do the dues cover?
5) Is there sufficient money in reserve to cover continuing needed maintenance and repairs?
6) Who handles the finances? CAUTION: The person who writes the checks should NEVER be a signer on the checks. (i.e., If one board member writes the checks two other board members should sign the checks.)
7) A management company should NEVER have control over the finances.
THE HOA (homeowner association):
1) Who are the officers and board of directors?
2) Are homeowners in the community happy with how the HOA enforces the rules?
3) How often are the meetings that are open to all homeowners?
4) What percentage of the homeowners attend the meetings? Poor attendance at the meetings can help create a community that is run like a dictatorship.
5) ~ ~ BEWARE! If you live in a state that allows nonjudicial foreclosures you could lose your home if a lien is filed for even a very small amount of money. DO NOT GET BEHIND ON YOUR HOA FEES.
Once you buy a home within a community governed by an HOA GET INVOLVED – ATTEND THE MEETINGS!
Please print this page out. Your happiness could be at stake.
If you have further questions, please contact me toll free at
1-866-422-5224 (Monday through Wednesday 9am to 5pm