Home Owners Association: What You Should Know

A Home Owners Association is defined as an organization in a housing subdivision, a planned residential community or condominium that creates and enforces rules for the benefit of homeowners. Per their rules, HOAs will collect monthly, quarterly, or annual dues to pay for upkeep of common areas.  They can also levy special assessments on homeowners to accrue capital reserves or to pay for unexpected maintenance repairs when the association lacks sufficient funds.

All condos and townhomes and many single-family homes are a part of a Home Owners Association. HOAs help maintain the quality of life for the community’s residents and protect property values for all owners. A Home Owners Association is often the target of criticism when they levy an assessment or increase in HOA dues to set aside money for capital reserves or perform expensive road maintenance that members don’t think is necessary, or impose rules that members find too restrictive.

All HOAs of subdivisions with single family homes will have an Architectural Control Committee, Design Review Committee or some board that will review and approve new construction, remodeling, landscaping, tree clearing, fences, etc. Common guidelines include a structure’s overall size, height, materials, colors, setback requirements, etc. The Home Owners Association Board of Directors typically appoint the people on the committee. Many mountain town HOAs have architectural restrictions, which protect mountain views, maintain a pleasing and uniform aesthetic look and feel, or prevent owners from allowing their homes to deteriorate. This group is in place to enforce the guidelines or rules for the entire HOA and to maintain the aesthetics and property values in the subdivision. It is always best to approach these committees with a local architect who has built in the subdivision previously and who knows the board members. Arrive to such a meeting with a flexible perspective.

What Documents and Laws Govern a Home Owners Association?

1. Articles of Incorporation establish the legal basis of the association and are filed with the Colorado Secretary of State’s Office. The associations are typically in the form of a non-profit corporation.
2. A plat map shows the defined boundaries of the various lots within the development or subdivision, as well as the association’s title with regard to the common areas. It is recorded at the county recorder’s office where the property is located.
3. CC&Rs (Covenants, Conditions, and Restrictions), sometimes referred to as Declarations, contain the deed restrictions to the property and the need for the creation of the association. They are recorded at the county recorder’s office in the county where the property is located.
4. Bylaws are the rules concerning the management and administration of the association. Resolutions, Rules and Regulations are additional restrictions for the community members that the association can adopt.
5. Federal laws that govern HOAs (and what they can and can’t do) include the Fair Housing Act, Internal Revenue Code, the Americans with Disabilities Act, and the Fair Debt Collection Practices Act.
6. There are state laws specific to common-interest communities such as condominiums, cooperatives, and homeowner associations. There may also be some additional state laws of concern, such as the State Fair Housing Laws and the state Fair Debt Collection Practices Act.
7. Local municipal ordinances that may affect HOA and HOA members include building codes, animal control, and parking restrictions.
8. Additional legal authority may impact an association, such as court case law, standards set by and for professionals, and certain lender requirements.

Home Owners Association Fees

Expect that there will be an HOA fee for your condo, townhome and many single-family homes. These fees are based on years of actual costs, and a budget and financials will be available to you to review. Some HOAs are professionally managed, and the fees will cover the management expense of this service. Other HOAs are managed by homeowners who volunteer to sit on the board. Most HOAs have a property manager who is subcontracted to oversee all aspects of the physical management and maintenance throughout the year and coordinate subcontractors. Most HOAs are well run and have a sufficient capital reserve fund, and a planned maintenance schedule that goes out for many years. Other HOAs may not be able to get fees increased or assessments approved and will continue to see deterioration to facilities, and consequently property values will suffer.

Home Owners Association Common Areas

Because multiple parties live in the same building(s), all residents of condominiums and townhomes must be equally responsible for maintaining the common areas. The common area maintenance can include upkeep of some interior areas of buildings, snow removal and upkeep of roads, parking lots, decks and roofs, landscaping, elevators, hot tubs, swimming pools, clubhouses, parking garages, fitness rooms, sidewalks, security gates, roofing and the building exterior. Many of these types of common areas, such as gates, landscaping of entryways, roads, clubhouses, hot tubs, and tennis courts, also exist in subdivisions of single-family homes.

Home Owners Association Covenants

Covenants are specific rules to be aware of. Some HOAs may never enforce their rules, and some need to. HOAs are good when they prevent your neighbor from keeping a jacked-up old car in the front yard, or painting their house purple with lime green polka dots. However, beauty is in the eye of the beholder, and HOAs are often perceived to be bad when they prevent owners from doing something they want to do — renting their home, having pets, or keeping an RV or boat in the driveway. HOAs can also afford a “first right of refusal” to the other property owners for any property under contract. With every real estate contract in Colorado (and in most states), it is mandatory for the HOA documents (financials, meeting minutes, covenants, etc.) to be presented to the buyer once under contract. Before you purchase a property subject to HOA rules and fees, be sure to read and understand these documents or hire an attorney to review them for you. And approach the HOA’s requirements with an open mind. Consider that every HOA has a story, and a history. You might be disappointed that you can’t keep your boat in the front yard, but if there’s a rule against it, there’s probably a reason for it.

How can I help you? I have over 30 years of sales and marketing experience and a top real estate agent in the mountain town of Crested Butte, Colorado representing affluent clients who are buying and selling their home and ranch properties in the mountains. To see featured properties or search the Crested Butte MLS – visit chriskopf.com. How is the Real Estate Market doing? Click this link to see my monthly Crested Butte Real Estate Market Reports. Whether you have specific questions about a property’s Home Owners Association or simply have questions about the area, I appreciate the opportunity to earn your business and be your Crested Butte Real Estate Agent.

Chris Kopf, Coldwell Banker Bighorn Realty

Previews® Property Specialist

(970) 209-5405