What Is An Hoa And Do You Understand Your Hoa Rules?
Oct. 19, 2014
The Homeowners Association first emerged in the US in the mid-19th century but became popular in the 1960’s when we experienced rapid growth. Early covenants and deed restrictions were exclusionary in origin, and in the first half of the 20th century many were racially motivated. For example, a racial covenant in a Seattle, Washington neighborhood stated, “No part of said property hereby conveyed shall ever be used or occupied by any Hebrew or by any person of the Ethiopian, Malay or any Asiatic race. In 1948, the United States Supreme Court ruled such covenants unenforceable in the case of Shelley v. Kraemer. However, private contracts kept them alive until The Fair Housing Act of 1968 banned them.
A Homeowner association is a corporation formed by a real estate developer for the purpose of marketing, managing and selling of homes and lots in a residential subdivision. It grants the developer privileged voting rights in governing the association while allowing the developer to exit financial and legal responsibility of the organization, typically by transferring ownership of the association to the homeowners after selling off a predetermined number of lots. Membership in the homeowners association by a residential buyer is typically a condition of purchase. A buyer isn’t given an option to reject it. Most HOA are incorporated and are subject to state statutes that govern non-profit corporations and homeowner associations. Unfortunately state oversight of homeowner associations is minimal, and varies from state to state. California has a large body of homeowners association law. The faster growing form of housing in the USA today is Common-interest developments (CID’S). This is a development that includes planned-unit developments of single-family homes, condominiums and cooperative apartments.
If you live in a community governed by a Home Owners Association (HOA) you MUST read the governing documents of your community. You should technically do so BEFORE purchasing your home. Sometimes the property you buy is on Indian Owned Land and you must understand what you are getting for your money and not be “shocked “years later when you try to sell the property. Remember it is the document that controls not what you were told or thought you were told. In addition the contractual documents like land leases are also of equal importance.
You would normally receive these documents from the real estate agent or the escrow officer assisting you in the handling of the sales transaction of the home. The enormity of the papers you receive are overwhelming but you must read and understand what you are receiving.
Don’t accept the admonition that “ass these documents are standard”. Though most community governing documents are similar they are not all the same and they are prepared for that particular community. Must of the language use is “legalese” and is better understood by an attorney. Thus if you do not understand something ask for an explanation and then consult with an attorney of your choice. I tell my clients it is a lot cheaper to spend money on a lawyer in the beginning to keep you out of trouble than retaining an attorney when “you know what” hits the fan.
Common Interest Development (CID) are the way of the future and they all have governing documents like Covenants, Conditions and Restrictions (CC&Rs) which are the most important. Though you are not expected to memorize these you are expected to understand them so keep them handy in a safe place where you can find them easily. IF you lose them there may be a cost to get a new set. They are often updated regularly to comply with new laws, so keep the updates with the originals. Take out your HOA paperwork and review them now and place them in a safe place.