Article Courtesy of The Mortgage Reports
By Gina Pogol
Published July 11, 2018
HOA rules: Read them (or weep)
If you fall in love with a home in a homeowners association (HOA), check the HOA
rules as soon as you can. There may be deal-breaking provisions in that
document. For instance:
Many associations ban outdoor smoking
They may also tell you what kind of plants you’re allowed
to have in your yard
It is very common for HOAs to regulate the color you
paint your house and other exterior changes
HOAs can limit the number of and types of pets you can have,
and whether you can put up a clothesline or even park in your own driveway. And
if the regs drive you out, they may prohibit the “for sale” sign in your yard.
HOAs can be good for
their members. They monitor your neighbor’s behavior as well
as yours, and that can be a positive thing. If the family
across the street lets their dogs bark all night, rebuilds
auto motors out front, and throws parties every weekend that
make it impossible for you to get into your driveway, you
don’t have to confront them.
Instead, you can have your HOA enforce the rules and you can
return to quietly enjoying your property. HOAs can keep
members from harming their neighbors’ property values with
visible junk or garbage or bizarre home “improvements.”
However, they can also nit-pick what you consider ordinary
Even worse, some HOAs flat-out bully their residents, even to
the point of forcing them into foreclosure. You want to avoid these.
Typical HOA rules
Most of the rules should be found in the CC&Rs. But some HOAs list rules in a
separate document. They cover:
Subletting or renting
The exterior, including paint colors or landscaping
Other renovations or repairs, like installing solar
panels or a satellite dish on the roof
The process to change or add rules, which may be
Penalties for breaking rules
HOA’s recourse for nonpayment, like fines, liens and
Number and type of pets allowed
Street parking policy
Guest policy for shared areas and facilities
Attendance for HOA meetings
You’ll also want to ask about pending special assessments you
might have to pay. And find out how many the HOA has had in the past.
How HOAs can force residents into foreclosure
Most homeowners have no idea that their HOA can foreclose for late payment of
dues or assessments. When late fees, interest and attorney charges are added to
the outstanding balances, they can skyrocket and become unaffordable.
To make things worse, when homeowners attempt to make partial payments, the HOA
may refuse to accept them and continue with foreclosure proceedings. In some
cases, homeowners had no idea that there was a foreclosure in the works. There
are many reports of owners who lost properties over a few hundred dollars.
In the worst abuses, insiders on the board have taken advantage. Sometimes,
board members have forced a homeowner into foreclosure so they could buy the
home themselves at a knock-down price. There are even lawyers advertising that
their main business is helping HOAs foreclose and take properties.
That HOAs can threaten foreclosure to collect several thousand dollars in late
fees, interest, fines and attorney fees for a delinquency that may total only
$300-$600 has led critics to describe the situation as nothing more than a
What you should do before buying
It may not sound fun, but it’s critical that you read the HOA’s covenants,
conditions and restrictions (CC&Rs) to see if you and your association are a
good fit. Restrictions against holiday decorations or pets may make you think
twice if you have a family.
You’ll also want to look at its bylaws and finances. An unhealthy HOA may defer
needed maintenance, compromising your property value. In addition, if more than
10 or 15 percent of the residents are behind on their HOA dues, you may have a
hard time getting a mortgage. Ditto if the HOA is involved in litigation.
You want to see an HOA with plenty of reserves. So it can fund improvements
without imposing a special assessment, and ride out emergencies without getting
Bylaws define the voting rights of HOA members and what actions board members
can take without a vote — be cautious if the HOA board has the power to create
new rules without input from residents.
You’ll also want to look at the minutes from recent board and general meetings.
These can tell you if there are impending assessments or a lot of discord
Beware of boards with attorneys on them if those same attorneys work for the HOA.
There is every incentive to jack up costs by adding high attorney fees when a
homeowner is in arrears. You can also see if an HOA habitually uses foreclosure
or very high fines to keep members in line.
Sooner beats later
Most of the time, you don’t get access to the HOA documents unless you make an
offer on the property. But you can ask questions in advance. if you have a
motorhome, for instance, find out about parking. Inquire about your dogs and
your clothesline before going too far in the process.
Note that once you are in escrow, most purchase agreements allow you a limited
time to review the HOA documents. Once that date passes, you are presumed to
have read and approved them. Getting out of a purchase at this point can be
tricky and expensive.