Monday, December 16, 2013
The Realtor buys a home: why you need to read the Home Owners Association stuff.
If you’ve reading this blog, you know that my husband and I are in escrow on a Studio City townhouse. We finally got the home owners association documents and they contained a few surprises.
HOA documents are usually voluminous. They contain the Articles of Incorporation and the CCRS (covenants, conditions and restrictions). These documents have a lot of boring legalese about how the “corporation” is formed, who is a member (you), how and when the Board can assess a dues increase, etc., etc. All of this is recorded at the county and legally binds the unit owner. The documents should also contain the yearly HOA budget, and income statement, and the minutes for a year’s worth of HOA meetings. If you’re going through this process, you’ll be so over the paperwork by the time you get these that you’ll be tempted to just glance at them. Don’t. There are things there that you really need to know.
By the way, it’s also a good idea to speak with the HOA president. They will be able to give you the back story on everything and even tell you where the bodies are buried.
Back to the documents. First, yes, you can lightly review the Articles of Incorporation and the parts about who is a member and who can vote, etc. However, when you get time or want to put yourself to sleep, please read every word. But then, turn to the rules pages of the CCRs. This will tell you how many pets you can have, storage rules, how many cars you can park, and if/under what circumstances you can make changes to the exterior of the unit, among other things. You cannot disregard these, although you may ask the HOA president if specific rules (like pet rules*) are strictly enforced.
Next, please review the budget, income statements, and minutes. This will tell you a lot about your new neighbors – do they spend money to keep the place up? How much? Do they spend money frivolously? Are dues projected to go up? What repairs has the building needed and what is anticipated? Have they done any termite remediation? Are there disagreements at the HOA meetings? If so, about what? Remember, you and the other owners are all in this together. These HOA folks will be your neighbors (gasp!) and will have an impact on your life and home while you live in your condo/townhouse. You’ll want to know as much as possible about them and how they view the HOA.
*Digression re pet rules: The vast majority of HOAs (but not all) allow domestic pets but may limit how many pets you can have. And some HOAs have breed restrictions.
Okay, back to us. Our new building does spend a lot on upkeep, and it shows. The building has had a few special assessments for painting and termites. And it seems as if the other owners are a convivial bunch. At least we hope so. All in all, we think we’re pretty lucky about our new place.
Coming soon: what are condo and townhouse HOA dues for and why they are worth it.