The Homebuyer’s Guide to Governing HOA Agreements

When you buy a home, there’s a good chance you’ll become a brand-new member of a Homeowner’s Association (“HOA” for short.).

An HOA is a group of homeowners in a designated real estate development. Not all properties are part of an HOA, but a growing number are. As of 2021, 58% of homeowners are HOA members.

Members contribute monthly dues (often called “assessments”) to go toward repairs and maintenance of their community. In addition, they abide by common rules governing the use of shared spaces (like gyms, lobbies, and golf courses) as well as many aesthetic requirements (like exterior paint color, lawn growth, and how big a dog you’re allowed to have).

These rules are outlined in the HOA agreements. There are four basic types:

• Articles of incorporation
• Bylaws
• Declaration of covenants, conditions, and restrictions (CC&Rs)
• Rules and regulations

If you buy a home that’s part of an HOA, you automatically become a member of that HOA, protected by its policies and bound by its governing documents.

Texas real estate agent Jo Anne Johnson has 14 years of selling experience, which have made her an expert in HOA documents, and how they affect prospective buyers. Does Johnson think HOAs are good for homeowners?

“Yes,” she tells us. An HOA “helps ensure [that] pride of ownership is going on in that community. … If [residents] can just start dumping their trash wherever, and building whatever they want to on their property, well, property values are probably gonna go down. … For the most part, people appreciate HOAs.”

That said, you do need to make yourself aware of these documents before you make an offer. An experienced real estate agent will insist that you take a fine-toothed comb to the HOA agreements and enlist the help of a lawyer for trickier legal issues that might be lurking there. Johnson tells us, “If there’s anything legal in nature, of course, we’re always just saying, hey … Might want to consult an attorney over this.”

Anthony Marshiano, a Chicago real estate lawyer, acknowledges that the documents are lengthy and not necessarily page-turners. “I know [the buyer’s] not gonna read every page,” he admits, but he will make sure a buyer is aware of some common topics. Does the buyer have a pet? Kids? An outdoor grill? There might be something in these documents that places limits on everyday life. “You don’t want to get into a situation where you’re like, ‘I want to get out of this,’ and it’s too late.”

For this reason, most states require the HOA to provide its agreement to prospective buyers. Marshiano tells us, “If you’re using a normal real estate board contract [the basic contract for the sale and purchase of a property], it will be in there, that the seller is obligated to provide these documents. And then typically it will state that the attorney review or the review period is not over until the buyer has had a minimum of, let’s say, three business days to review those documents and approve them.”

So let’s dive into these HOA agreements and see what they dictate!

Articles of incorporation

The articles of incorporation are a simple record of the establishment of the HOA. It’s usually little more than the name of the association, its geographic location, its status as a nonprofit, and the names of the first agents in charge of the HOA at its inception. The articles are drawn up before a single unit in the HOA is sold.

(In rare instances, HOAs are unincorporated. But incorporation acts as protection for individual members’ assets if the HOA ends up owing an amount of money its funds can’t cover.)

Of the four types of HOA agreements, this is the one that has the least influence on your day-to-day life. Think of it as the origin story of your HOA.

Bylaws

HOAs need rules on how to create rules.

Most HOAs have a board of directors made up of your fellow members: elected volunteers who also own properties in the association. Generally, the board is composed of at least a president, a vice president, a treasurer, and a secretary.

The bylaws specify the size of the board, how the board is elected, what their term limits are, their rules for running meetings, and how they can enforce the current rules and create new ones as needed.

The bylaws also give the board the power to collect dues and assessments from members.

Declaration of covenants, conditions, and restrictions (CC&Rs)

The CC&Rs are the rules for living on the property. They’re so important that they often need to be recorded in the real property records in the county, meaning they are as official a part of the property as deeds and maps.

They might cover what colors you’re allowed (or not allowed) to paint your house, whether you can install solar panels or satellite dishes, and where you’re permitted to park your car.

These might seem restrictive, but they are all in service of maintaining the property to exacting standards. The whole idea of an HOA is that the members are stronger together, whether you’re pooling money to make repairs to common areas or making sure the entire community is aesthetically consistent and beautiful.

“Each association is particular, you can’t judge one to the other,” cautions Penny Carter, Community Association Manager at Collins Management in Northern California. “All the CC&Rs are designed for that specific association.” So even if you have experience living in a different HOA, don’t assume the same rules apply to a new property you’re looking at.

We asked Marshiano if homebuyers ever find “dealbreakers” in the HOA agreements, something that made them decide not to make an offer at all.

“It’s very rare that that happens,” he tells us. But “one of the big ones is pets. The type of pets that are allowed in the building, whether they may have had a dog over a certain weight, something like that.”

Most HOAs allow pets, and even those that don’t will often make exceptions for service animals. But HOA members might have to leash their dogs in common areas, train them not to bark excessively, or ensure they don’t exceed an established weight requirement.

Changing CC&Rs can be difficult, often requiring consulting state laws, reaching out to an attorney, and getting the entire HOA to weigh in.

Rules and regulations

The rules and regulations act as more fluid enhancements to the CC&Rs. While CC&Rs outline rigid requirements, rules and regulations can get more granular and reflect a changing atmosphere.

For example, a new addition to the rules and regulations might specify that children are not allowed to play in the streets, even if the CC&Rs make no mention of this. This might be because more children have moved into the neighborhood, revealing a dangerous scenario with local traffic. Or it might be simply that newer board members want more peace and quiet in the evenings.

Another example might be additional lenience to cleaning up debris on your lawn in the wake of a major storm that causes a lot of fallen branches that can’t all be cleaned up immediately.

Essentially, rules and regulations are more nimble, changing with the current needs of the HOA. They can usually be added with a simple majority of the board.

Carter describes the difference between CC&Rs versus rules and regulations this way: “CC&Rs outline … what is permitted and what is prohibited,” she tells us. “Rules and regulations will reflect what is in the CC&Rs, and sometimes they’ll go a little beyond.”

As an example of a CC&R rule, she suggests, “Say if you have parking rules … Everyone has to park in the garage.” A rules and regulations addition might be: “Garages should be free of storage to allow a vehicle to be parked in there.”

If you want a hand in creating and changing rules and regulations, you can run for a position on the board. (Check the bylaws for term lengths and voting processes!)

What if you don’t follow these documents?

As stated above, the rules are in place for the benefit of every member. As Johnson puts it, “a community with restrictions [is] only as good as [those restrictions] being enforced.”

The board can’t enforce rules inconsistently; that would be “selective enforcement.” It’s unfair and, in some states, illegal. It also risks rendering the rules meaningless. If the rules only apply to some members and not others, or if they come into play sporadically, they lose their power.

So if you leave garbage cans out on the curb beyond the designated time limit or paint your shutters a forbidden shade of orange, you could be in for a fine or a limit to your use of community facilities (like the pool or the gym). Your HOA’s bylaws give the board the power to address noncompliance.

If your transgression is monetary, the HOA has the power to put a lien on your home for unpaid debts. Marshiano cautions that, for example, “if you’re late on your assessments, that’s a right they reserve.” A lien is essentially a debt that’s attached to your property. It means that technically, a piece of your property equal to the size of the debt now belongs to someone else (in this case, your HOA). Since you are no longer the sole owner, your home becomes more difficult to sell.

If the lien is not addressed, the HOA board may be able to pursue foreclosure, which means you could lose your home.

Clearly, it’s best to be as prepared as possible. When you’re house-hunting, make sure to enlist the help of a top real estate agent who knows their way around all the HOA agreements.

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