HOA's, CCR&Rs and You

Many clients are reserved about HOAs in the neighborhoods they are seeking homes in. HOA stands for Home Owner's Association. The overwhelming majority of people are at the least, cautious regarding buying in a neighborhood with an HOA and many flat refuse to buy if an HOA is present.

Caution is well advised as the good standing of the HOA is very important, especially in a condo or townhouse development where the responsibility of the HOA is high. For this post today, I am focusing on HOAs in detached home neighborhoods.

An HOA is often utilized to make certain the neighborhood continues to conform to the original specifications the developer created. Often there are common areas the HOA will maintain such as walking paths, parks and sometimes the front yards of the residences. There is of course a fee that is billed to the homeowners monthly, quarterly or annually. Generally the HOA elects a board from the ranks of the homeowners and sometimes the HOA is run a professional management company.

An HOA can be a great asset to a neighborhood as they routinely enforce the CC&Rs that can help preserve the integrity of the neighborhood. CC&R is an acronym for Covenants, Conditions and Restrictions. These are generally deeded and often recorded with the deed and thus run with the land indefinitely. Disbanding an HOA or dramatically changing the way the HOA is managed may occur via a vote of the homeowners. CC&Rs require a significant legal action to remove.

The two go well together. The HOA can enforce the CC&Rs. CC&Rs are much more difficult to remove as they are deeded to the land. However, if no HOA is present, then enforcing the CC&Rs becomes difficult. It is complaint driven and would likely require formal legal action to enforce. Inversely, an HOA without strong CC&Rs can quickly become useless as well. As the homeowners can simply vote away important protections.

I have watched nice neighborhoods decline rapidly due to a weak HOA/CC&R or no HOA at all. The idea of keeping a neighborhood as nice as the day you bought the house over years or even decades is important to many people that intend to live in a home for long term. The fear some buyers have is that the HOA will be run so strict that homeowners lives will be negatively impacted. This can be true sometimes. A client may move into a neighborhood that restricts RVs and Boats or street parking. Perhaps when they buy the home these restrictions are fine, then they have a family and want a boat or end up with teen drivers that can't park their car in the neighborhood, etc. These are things buyers must consider when purchasing a home. Buyer's need to think about the big picture and what their future may hold. Some things are not planned in life, but many are. Buying a house that does not conform to one's future plans is foolish at best.

The bottom line about HOA and CC&Rs is that people who want a neighborhood that is well regulated and keeps homeowners in compliance with the neighborhood plan, should seek out areas with strong CC&Rs and a solid HOA. People who like to have RVs and boats and extra cars and such should avoid HOA regulated neighborhoods.