How will a homeowners association affect me as a homeowner?
Homeowner associations vary significantly from neighborhood to neighborhood, but their most important function is to preserve the nature and value of a community. Despite this virtuous purpose, however, complications oftentimes arise because of unrealistic expectations, misinformation and misunderstanding on behalf of the homeowner or the board. Homeowners will have a much more positive community experience by learning about a community and the HOA before purchasing a home. There are a few simple things that individuals in the market for a home can do to familiarize themselves with the expectations of a HOA:
- Consult with a real estate agent about whether the home in question is part of an association.
- If the home is part of an association, carefully review all governing documents, such as CC&Rs, Articles of Incorporation, Bylaws, Rules and Regulations, Design Guidelines, etc.
- If there are any questions about the documents, consult with an attorney for guidance. This could very well prevent future stresses and expenses.
- Speak with members of the community and examine whether neighborhood facilities such as parks, pools and tennis courts are well maintained.
- Speak with the president and other members of the HOA board about what is expected in the community.
Homebuyers need to understand that by purchasing in an association they are effectively making a contractual agreement with the HOA to abide by the CC&Rs. Typical CC&Rs include requirements to pay assessments, abide by architectural guidelines and the like. While it is infrequently the case, sometimes CC&Rs are unenforceable because they are unreasonable or unconscionable. Homeowners should speak with an attorney who is experienced in the area of HOA law if they object to their CC&Rs.
What questions should I have answered before purchasing in a HOA?
Homebuyers should not purchase a home until they are able to answer the following questions:
- How much are assessments and when are payments due?
- What are the assessments used for?
- What are individual homeowner’s responsibilities?
- How much can assessments increase every year?
- What is the budget?
- Are there any pending lawsuits and what for?
- Are the president and other board directors agreeable and friendly?
- Are there restrictions on renting the property?
- What are the architectural guidelines?
- Does the board get along well with and listen to the membership at large?
- What are the rules regarding outside antennas, solar panels, satellite dishes, flags, pets, clotheslines, fences, parking, home businesses, etc.?
How can I participate with a HOA?
The best way to avoid problems within a community is by becoming involved. By doing so, homeowners can have a voice in the associations’ decisions. Homeowners can attend meetings or serve on a committee or association board. By doing so, individuals can protect their most precious investments, their home and community.
What are some things I can do to protect my interests before buying real property?
As with any investment, it is critical for buyers to know what they are getting into before making the purchase. Here are a few suggested questions to have answered before buying a home or piece of property:
- Is the mortgage payment manageable?
- Does the purchase agreement contain any covenants or restrictions that seem unmanageable?
- Is the property in compliance with zoning regulations?
- Is the property title clean and free of defects?
- Is the property functionally and environmentally safe?
These questions may be difficult to answer without the advisement of a qualified attorney so it is wise to seek counsel before making an investment. An attorney will also be able to provide guidance on which types of insurance are appropriate for the property in question.
If I cannot get approved for a home or property loan can a cosigner be used to aid in the approval process?
Lending institutions sometimes refuse to give loans to individuals with poor credit or no credit history. One way to get around this is by having a cosigner added to the loan. However, because of the serious implications which it can impart, cosigning is never something that should be taken lightly.
If an individual has extremely bad credit such that he or she is unable to attain a loan, a cosigner will generally not provide a way to overcome the dilemma. However, cosigners can typically be used to increase a loan amount. So while cosigners can assist borrowers in receiving larger loans, they are generally not useful to those who do not approve for loans in the first place.
Before cosigning on a loan, individuals should consult with an attorney to fully understand their obligations. At the very least, however, cosigners need to understand the following:
- Cosigners assume responsibility for the debt in the event that the primary borrower defaults on the loan.
- The loan will be included in the cosigner’s credit history, which could affect his or her ability to apply for future loans.
