HOA? Beware the Rules and Regulations!
Anchorage, Eagle River and the Mat-Su Valley are full of amazing homes located in what are known as managed or Common Interest Communities (CIC). If you’ve never purchased a home in a managed community (“managed” as in overseen by a homeowner association or HOA), you probably have no idea what will be included in the package of HOA documents the seller is responsible for providing you.
That’s ok, at this point you’re not expected to. You are, however, expected to know what is in this package and read and understand every word before you fully commit to the purchase.
HOA documents aren’t light reading. They’ve been prepared by lawyers, for lawyers so naturally they are filled with legalese. Understanding the lingo, however, is critical to the future enjoyment of your new home.
The Homeowners Association
Owning a home in a CIC, such as a condo, townhome or even a single-family home, offers freedom from some of the day-to-day responsibilities of homeownership, such as landscape maintenance and snow removal. These communities offer the peace of mind that comes from knowing your neighbors will take pride in their homes and you won’t get stuck living next door to a guy who refuses to mow his lawn or that performs auto repairs in his driveway. On the flipside, the restrictions under which these features are made possible aren’t encountered by homeowners that live outside of a CIC.
The HOA is comprised of all of the homeowners in the community and its governing body is the board of directors ? typically a group of homeowners elected by the entire association. It is these folks that, among other duties, ensure the CIC’s rules and regulations, as laid out in the governing documents, are enforced.
The HOA’s board of directors are powerful governing bodies, a fact which led NBC News’ Jackie Faye to liken them to “little governments.” Although the board most likely did not write the governing documents it will interpret and enforce them. Whether a “little government” is beneficent or dictatorial depends upon who sits on the board.
Rules and Regulations
While the documents you’ll receive for review cover a variety of issues, pay close attention to the pages that restrict how you can use your new home. Let’s take a look at some of the more common rules and regulations you’ll find with homeownership in a CIC:
- Conduct of homeowners: The HOA has the power to regulate conduct as it applies to the safety, health and welfare of other occupants as well as other occupants’ rights to a quiet enjoyment of their homes. These regulations may prohibit smoking; limit the amount and type of noise occupants create and dictate conduct on a broad range of other issues.
- Pets: The governing documents may restrict homeowners as to the number, size, species and breed of pets they are allowed to keep on the property.
- Holiday decorations: It is common for CC&Rs to outline how many decorations are allowed, how they are to be installed and a time period in which these decorations are allowed.
- Tenants: The HOA has the power to limit the number of rentals in the community. If you are purchasing a home as an investment and hope to rent it out, you need to check the rules carefully.
- Parking: You may be restricted as to the type of vehicle you can park on the property, such as a trailered boat, a camper or other recreational vehicle or a large truck. Where you can park may be regulated as well. Many HOAs insist that all cars be parked in the garage, which may limit your storage options in your new home.
- Landscaping: Restrictive covenants may dictate that you can do nothing to alter your front yard landscaping unless you submit a plan to the HOA for approval.
- Home Exteriors: The documents may not allow you to place a building (such as a shed), install a fence, erect an antenna, a light standard or any other exterior structure outside your home. There may also be restrictions against painting the outside of your home or you’ll be given a list of colors you must choose from if you want to paint.
Purchasing a Home in a Common Interest Community
Immediately after your offer is accepted, the HOA will send along a package of all the legally required disclosures and documents for your perusal. Under AK Statutes, buyers have five days to review the documents (15 days if you’ll be buying in a new-home community rather than resale)
Should you decide to continue with the purchase after the review period, it will be assumed by all parties that you read and understood every single word in the documents. This limits your remedies down the line should you discover a restriction you can’t live with.
Yes, the HOA documents are boring and yes, they may be challenging to interpret. Although your real estate agent or loan officer may be able to help you decipher them, they are not lawyers. To be absolutely sure you can live within the restrictions, have a real estate attorney review the documents and explain anything you may not understand.
While other documents you will receive are important as well, the rules and regulations under which you will be expected to live will determine your enjoyment of your new home. No matter how much you love that amazing townhome, it’s not worth purchasing if the regulations impact your lifestyle and restrict your freedom.