Over 30 million Americans lived in communities with a homeowners association (HOA) in 2012, according to the Community Associations Institute (CAI). Even though 92 percent of HOA residents surveyed by the CAI said they were "satisfied or neutral" with their experience, living in a community with a homeowners association may not be for everyone.
"Oftentimes, homebuyers don't ask enough questions in advance and find themselves surprised by restrictions on what they can do," says Kelly Richardson, a managing partner of Richardson Harman Ober PC, a Pasadena, Calif.-based law firm that regularly represents HOAs.
If you're buying a home with an association linked to it, it's important to do your due diligence before joining an HOA. Here are five tips to help you along the way:
5 homeowner's association tips
No. 1: Understand the financial costs. Be extra careful when moving into a condo or community that is managed by a homeowners association, warns Eric D. Koster, a partner at Kurzman Eisenberg Corbin & Lever, LLP in White Plains, N.Y.
"In many cases, developers artificially cap common fees in new condos to make their units more attractive to buyers. When the developer exits the picture, common charges jump dramatically when the homeowner association has to pay market price for services."
No. 2: Read key documents carefully. Pets, hot tubs and even wind chimes are at the top of the list of items you may not be able to have in a planned community.
"Homeowners associations are a shared economy," says Alan I. Schimmel, a partner with the Schimmel & Parks law firm in Sherman Oaks, Calif., which regularly handles HOA issues, "so you need, beforehand, to delve into key documents that include the board records and CC&Rs."
Related: Can the HOA really foreclose on my home?
The covenants, conditions, and restrictions (CC&Rs) are basically documents which explain how you can use your property.
"For example, the CC&Rs may limit the number of pets, or the colors of the homes, or whether one can conduct a business in their residence," says Richardson.
No. 3: Know the bylaws. Knowing what your association has control over is job number one before moving into a home governed by a homeowners group. Your rights and responsibilities are clearly spelled out in your CC&Rs agreement, as well as any restrictions on what you can do with your home, like put up a basketball hoop or adding a hot tub, says Koster.
"Homeowners need to become better educated on their rights and responsibilities before joining a HOA," says Richardson. "The bylaws are the biggest issue facing homeowners when they are considering joining a HOA. Before they become an association member, they need to have a complete understanding of exactly what they are signing up for."
Richardson says potential homeowners can avoid mistakes and confusion by simply reading the governing documents of the homeowners association before close of escrow.
No. 4: Reconciling complaints and misunderstandings. The odds can be stacked against you if you have a complaint or issue, and that's by design, says Richardson.
Developers can exert their influence by controlling the number of seats on the board, says Koster. Limiting the number of board members increases the odds of handling residential complaints and requests in their favor, he says.
The key is getting your complaint in early, and in writing. State your case, clearly and concisely, and back everything up with documentation, especially if you paid a bill to fix a problem that the HOA should have resolved, such as bringing in an outside contractor to remove snow, for example.
Leave emotion out of the equation and don't personalize the problem, says Richardson. Also, canvass your neighborhood and see if your neighbors faced a similar problem. There's no antidote like experience, and leveraging your neighbor's experience may save you a lot of time and trouble.
No. 5: Determine what kind of insurance is covered by the HOA. In general, it is up to the HOA, via its board of directors, to provide catastrophic insurance against disasters like fire, wind and storms.
While most states have specific guidelines HOAs need to follow in providing insurance for their organizations, homeowners should always ask what insurance they need to cover before they purchase.
Living in a community governed by a homeowners association is one part preparation, one part education and one part human relations. Master all three and your HOA experience can be rewarding.
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I like your tip to find out what kinds of insurance the HOA covers. I live in an area where ice storms occur. They can cause a lot of damage and I want to make sure that any HOA I join will cover any damage.