What You Need To Know About Homeowners Associations

Almost one in six people in America live in a community regulated by some kind of homeowners association, according to the Community Association Institute, a national non-profit group that provides resources to such organizations. They may live in the city or the suburbs, in a common interest development, privately owned community, planned unit development, subdivision, condominium, co-op apartment building, or mobile home subdivision.

Depending on where you live, your local organization may be called a homeowners association, property owners association, community association, civic association, property board, property committee, or some other similar term. But in each case, the primary purpose of the group is to manage the neighborhood’s common areas. The secondary purpose, however, is to maintain certain neighborhood standards by means of regulations.

Since the 1980s, membership has become a mandatory condition of ownership in some communities. An estimated four out of five houses built since the late 1990s are governed by a homeowners association, according to the Community Association Institute. Yet few people really understand the risks versus the benefits.

The Fine Print

The initial scope of what is to be regulated by a homeowners association is typically set out by a property developer. The developer establishes what services and expenses are to be covered by an association’s budget, its by-laws and the obligations of its members. He or she runs the association while the development is being completed and then turns control over to a committee of owners.

Most homeowners associations are incorporated as not-for-profit corporations and employ professional property managers and lawyers to support the association. They regulate property use in your community through covenants, conditions and restrictions included in your deed. These can define the colors you can paint your house, how often you mow your lawn, how many cars you can park in your driveway, whether you can have pets, operate a home business or erect a flag, among many other activities.

While many homeowners like having a common code of behavior and standard of upkeep in their neighborhood, others find the restrictions intrusive and problems can occur. Becoming entangled in a lawsuit with a homeowners association could undermine the value of your property.

Before you buy

If you’re considering buying a property regulated by a homeowners association, ask to see the covenants, conditions and restrictions before you make your offer. Read them carefully to see if you will be comfortable complying with those rules. Find out how much and how often the board can raise fees and levy assessments. Ask to see the association’s financial records and review them with your lawyer. Talk to local residents about any problems there may be. Ask to meet with a board member to learn about the association and, if you become an owner, attend public meetings to keep up with the issues.

For more information on homeowners associations, visit http://www.lendingtree.com/cec/yourhome/buying/homeowners-association.asp

Article Source: http://www.rightbiz.com

The editorial staff at LendingTree is committed to helping consumers become smarter borrowers. Visit www.lendingtree.com/cec for more information and tips on buying, selling, and financing a home. Copyright 1998-2006, LendingTree, LLC.

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