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The Homeowners Association

Is this reputation deserved? It’s hard not to believe the rumors while being bombarded with news stories about Homeowners Associations (H.O.A.’s) that force residents to take down American flags, or those that take homes when residents are late paying their dues.

H.O.A.’s are like “little governments,” according to Jackie Faye of NBC News. Like all governments, they exercise the power granted to them in one of two ways: with benevolence or authority. Perhaps Abraham Lincoln foresaw the rise of the H.O.A. when he claimed that “… if you want to test a man’s character, give him power.”

So, who are these people?

A H.O.A. is actually a legal entity whose purpose is to manage a group of housing units, or a common interest development, as they are known in some regions of the country. These developments may be single-family dwellings or condominiums. The decision-making body of this entity is typically known as “the Board,” and there may be committees as well. The association board is composed of homeowners who act as volunteers, and are generally chosen in annual elections open to all homeowners within the community.

The reasons for volunteering to sit on a homeowners association board are varied. Some homeowners want more of a say in how the money is spent, others are concerned with maintaining home values.

Duties and responsibilities

Although it seems as if their boards have unlimited power to do as the members wish, most states have laws that govern what they can and cannot do. Yes, they sometimes overstep these laws. While duties and responsibilities vary across the country, here are some that are common to most:

• Paying taxes on the common areas
• The enforcement of the association’s rules, such as the bylaws and the Covenants, Conditions and Restrictions (CC&Rs)
• Creating the association’s budget
• Creating rules for the use of the common areas
• Disciplining homeowners for violations of H.O.A. rules

Buying a home in a H.O.A.-governed community

They must supply the homeowner with certain documents when there is an offer to purchase the property. The seller then gives these documents to the buyer. There is usually a charge for the copies and the seller typically pays this fee.
The doc packages are usually quite thick and may be extremely complex and boring. It is essential, though, that you read and understand everything in them. If you need help, contact an attorney. Once you own the home, you are obliged to follow the rules.

Some items to pay close attention to in the CC&Rs include:

• Pet policies, if you have pets
• Parking rules, for yourself and guests
• The rules and restrictions for the use of on-site amenities
• Landscaping rules
• House color, exterior decorations allowed
• Restrictions on the construction of outbuildings, such as sheds and gazebos
• The rules regarding leasing your home

Look at the H.O.A.’s budget:
• Does the income cover the costs? If not, why?
• How is the money spent?
• Does the reserve account hold enough money for emergencies?

Check out the board’s meeting minutes:
• What type of issues does the board typically face?
• What type of actions have they taken against homeowners?
• Have they talked about increasing fees or any upcoming special assessments?