When buying property in a common interest development (“HOA”), one automatically becomes a member. Here are 14 items to consider before closing escrow:
- Read the CC&Rs. CC&Rs are an agreement between all association members, binding each when they take ownership. Read this document before taking ownership, not after. Look for restrictions regarding how your property is used – Are there pet limits? Can you park RVs in driveways? In a multi-story building, are there restrictions against hard floors? You need to know first, not later.
- Review the reserves disclosures. Prudent associations set aside money each month to offset the ongoing deterioration of major capital components (roofs, asphalt, paint, etc). Associations with little money saved in reserves may require imposition of special assessments against the members to fund major refurbishments. Underfunded reserve accounts are a form of hidden debt not reflected on the balance sheet.
- It isn’t about “me,” it’s about “us.” Common interest communities are just that – communities. Shared ownership also means shared control, which means you can’t just do anything you want (nor can your neighbors).
- Is it managed? California HOA law is so complicated it is difficult to operate one without a professional manager. If the association has volunteer management, it is probably innocently violating many laws (and the board is probably working too hard as free community managers).
- The directors on the board are also homeowners and pay the same assessments you do. They volunteer their time to handle things you don’t have to worry about. To understand more and be involved, volunteer for the board.
- No license or credential is required in California to manage associations, so ask about the manager’s reputation and credentials.
- If buying a condominium, understand that “common area,” the shared property, is probably a lot more than you think. It may include even the drywall underneath your paint, or the floor underneath your carpeting.
- In associations it is NOT better to ask for forgiveness than permission. Check the architectural requirements, as you may be required to apply to the association before making changes to your home or yard.
- Never assume the board is not enforcing a rule or restriction and therefore that it is OK to just ignore it. The association’s enforcement actions are normally in closed session, and you may be unaware of the board’s actions against violators… until you become one.
- HOA managers don’t make decisions – they advise the board and then implement board decisions and policies.
- Directors have no individual power to make decisions – HOA leadership is a team sport, and boards make decisions by majority vote.
- Very small HOAs often operate very informally with less compliance to law or the documents.
- Download CAI’s free and informative “First Time Homeowners Guide to HOAs” available at www.caionline.org. Click on “homeowner leaders” then “resources for residents.”
- It’s all about being a good neighbor. Consideration is the key to happy and successful association living. A self-centered focus leads to conflict and unhappiness with one’s HOA neighbors.
HOAs are a large and increasing sector of the housing market. Look before you leap – and make sure you actually read! Embrace the benefits (and responsibilities) of HOA living, and enjoy a positive experience in your HOA!
Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to Kelly@rodllp.com. Past columns at www.HOAHomefront.com. All rights reserved®.