When buying property under any kind of Homeowners Association (HOA) control, buyers tend to overlook or not comprehend the rules in a planned development. Buyers can be attracted to all the amenities such as the pool, gym and recreational areas and think the HOA dues they pay each month are mainly for the upkeep. The HOA can govern and restrict your life in ways you don’t want. The rules of HOA communities are set forth in a Declaration of Covenants, Conditions & Restrictions (CC&Rs).
On the day of closing you will sign a document stating you have read all the CC&Rs, you understand, agree and will abide by them. Make sure you read and understand every word very carefully. It may save you from receiving penalties, fines and fees for violating one of the rules later.
Were you thinking you could fence in your back yard for your dog? The CC&Rs may prohibit you from erecting a fence. And what about your dog? Did you miss the paragraph stating dogs of a certain weight or breed is forbidden? Under the legal documents you signed, you could be forced to give up your beloved 50-lb Rottweiler.
The HOA can govern what color you can paint your home, what kind of flowers you can plant. Some developments restrict what and how long guests can visit. If your mother stays with you two weeks each year, you might have to pay $200 a day for her visit. If you have a truck, you may not be able to park it on premises, even if it’s a new one.
Before you sign your closing documents, ask your realtor, the HOA or the title company for the following HOA items: Bylaws, Rules and Regulations, a statement of the current assessment or homeowner’s amount, copies of the financial records for the past year or two, and copies of the HOAs meeting minutes for the past 2-3 years.
Some of the things you should look for:
Bylaws. These will outline items such as voting rights of members, meeting requirements and budget and assessment procedures. The HOA has a board of directors. The bylaws typically specify how many members on the board and the length of their term. If you find the board isnot run well (after looking at their Financial Records) and the President has another 5 years to go, you may want to think again if this is the place for you.
If you’re buying into a new development pay particular attention to the first board. Often, the first board is controlled by the developer or developer’s employees. A developer-controlled board can choose not to investigate problems they’d be responsible for.
Rules and Regulations. These can be more detailed than the CC&Rs and so picky they may not fit in with your lifestyle. Maybe trash cans have to be removed from the curb by 5pm or face a $50 fine each time. You don’t get home until 6. Ask if the HOA has a monthly newsletter. One newsletter had an entire page devoted to what kind of frame could go around your doorbell. No brass-colored, no novelty frames - only round or oval frames were allowed. You may want to reconsider this complex if they’re this particular.
Statement of the Current Assessment/Financial Records. You’re obligated to pay dues. You may be charged extra fees, dues may be increased for upcoming maintenance. After reviewing the bylaws and CC&Rs, you’ll know the procedures for setting or raising assessments and emergency assessments. Are there annual limits? Determine whether the HOA is solvent, do they collect enough dues, what kind of budgets have they set, what kind of money do they have in reserve?
Meeting Minutes. By reading through the minutes, you can spot any conflicts, or issues that have happened or keep popping up. How were the issues handled or not dealt with? You can find out a lot through the minutes - perhaps flooding keeps occurring, the roofs are leaking, balconies need repair, the road needs repaving. Issues like these may need huge assessments from the homeowners in the coming months.
If you’re not sure you understand any of the above documents, find a qualified real estate attorney. The attorney can review the documents with you and alert you to any potential problems. If you find yourself at odds with the HOA, or have received a legal notice for something you dispute, find a qualified HOA Defense Attorney.
Gantenbein Law Firm's Denver, Colorado HOA attorneys can expertly assist with your HOA issues, questions or problems. Our attorneys represent homeowners ONLY, not the homeowner association board. We are experienced in HOA covenant violations or enforcement issues, CCIOA issues, declaration disputes, board member disputes or removals, and more.
Visit us for more information on our Denver, Colorado Real Estate attorneys and practice areas, including HOA defenses or judicial foreclosures started by Homeowner Associations.
In addition to Real Estate Law, Gantenbein Law Firm also practices Business Law, Foreclosure Defense, Tax Law, and Wills, Trusts, Probate and Estate Planning. For more information, or to schedule a consultation of your case, please call 303-618-2122 or visit our website.