According to the Community Associations Institute, some 50 million Americans live in homeowner association communities. HOAs are quasi-government entities that are responsible for maintaining services and shared amenities plus collecting the mandatory fees to pay for them. They also have the power to enforce architectural standards and rules, much as a government would. These rules are created to help preserve and protect the members’ property values. But they can also create conflicts when buyers purchase homes without being aware of the rules.
Part of the challenge is that HOA rules can differ significantly from one HOA to another. They can also be more restrictive than rules imposed by local governments. In addition, because the policies can be changed at any time by an appropriate vote of the board or members, it’s often difficult to be certain that the rules a buyer receives at closing are the definitive ones.
Here are some strategies for getting to the bottom of the HOA’s rules:
1. Are all rules in writing?
While HOAs generally have a set of written rules, some also have unwritten rules that offenders don’t discover until they break them. Although the courts usually won’t enforce unwritten rules, taking a dispute to that level is costly and aggravating. Buyers should ask if there are any unwritten rules. If the answer is “no”, get it in writing.
2. Are the rules specific?
A vague rule that’s open to interpretation is an invitation to disputes. One particular area of rules where this is common is architectural design control. For example, the HOA rules may state that “the board must approve owner remodeling and landscaping projects” but not have any specific criteria for what is acceptable. As worded, this board could reject virtually any request for approval for any reason. If architectural design control is important, the HOA should have a specific policy so those that want to make changes have clear guidance.
Another area where vagueness abounds is in parking rules that state something like “no commercial or recreational vehicles may be parked within the homeowner association”. These kinds of vehicles come in many sizes and types so the parking rules should be very specific about which constitutes “commercial or recreational vehicles”. This often means large commercial trucks and vans, RVs and boats but it could mean much more. Get the board to approve in writing whatever commercial or recreational vehicles your client has before closing to avoid this potential problem.
Pets are another volatile area of HOA rules. Some HOAs restrict the number, weight, size, type and breed. More HOAs are prohibiting aggressive dogs like Pitbulls, Rottweilers and Dobermans. It pays to ask.
3. Are all rules consistently enforced?
If a rule is important, it should apply to everyone, including the board members and their friends. A buyer can inquire with several neighbors about how aggressively rules are enforced and if particular rules are stressed more than others.
4. Do some rules seem unnecessary or arbitrary?
If there is a city ordinance to control wandering pets, for example, the HOA doesn’t need the same rule. If an HOA has enacted many rules, this could indicate a legalistic and confrontational board, which should be avoided unless the buyer is of the same mind.
5. Are penalties for infractions reasonable?
If a rule is necessary, it needs to have a reasonable penalty for breaking it. Some boards think the way to control folks is to invoke huge fines for violations. When challenged, courts routinely throw out such fines as “unreasonable”. A review of the rules will reveal whether penalties are unreasonable. The only thing worse than an unreasonable penalty is no penalty at all. If a rule has no penalty for violating it, it is no more than a suggestion.
6. What is the appeals process for rule violations?
An important part of HOA rules is the ability to appeal. If none is provided, you’re left with possibly having to hire a lawyer to defend your interests. Look for language in the rules that allows an appeal to the board.
At the end of the day, HOA rules can have a big impact on an buyer’s future enjoyment of the property. A buyer should always make their offer to purchase subject to review of key documents and the HOA rules.
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