Neighborhood associations, which are commonly referred to as homeowner associations, are non-profit organizations set up to 1) preserve a certain standard of quality in a neighborhood and 2) keep property values as high as possible.
Approximately 42 million Americans live in neighborhoods governed by homeowner associations. One of the reasons why neighborhood association communities are becoming so popular is that they allow members to enjoy a more comfortable standard of living by banding together to share the cost of maintaining the property. Additionally, these associations also prevent the government from being unduly burdened with the cost of maintaining fast-growing neighborhoods, since the homeowner’s association assumes responsibility for these services.
However, this convenience comes with a price. Neighborhood association members are required to pay monthly fees in addition to their mortgages. These fees are very similar to condo or co-op fees, and the funds are used to care for and maintain the common areas of the property or community. In addition to paying these fees, members are required to abide by the association's guidelines, which are known as their Covenants, Conditions & Restrictions (CCRs). These rules are typically designed to make sure no homeowner decreases the property value of the neighborhood, and can be VERY strict.
Homeowners in some neighborhoods have been cited, fined and even sued by their homeowner's associations for painting their home the wrong color, not taking their Christmas decorations down in a timely matter, and even flying the American Flag. Others have lost their homes in foreclosure as a result of money disputes they may have had with their association. And others are just not satisfied with the quality of services that their neighborhood association provides. While these are all extreme cases, one must still use scrutiny when living in a community governed by a neighborhood association. Many people have paid dearly because they were not fully aware of what they were getting into. It is very important that these associations are researched thoroughly before you move in.
Before committing to buy a house, you should both ask your real estate agent or someone in the neighborhood association for a copy of the CCRs. Read it carefully and ask for clarification if needed.
Since neighborhood association fees are used to provide maintenance, sanitation, and other services, it is important that the association's money is well managed. Therefore, homeowners are strongly recommended to review the neighborhood association's financial statements before purchasing a home. When reviewing these documents, make sure you pay careful attention to special assessments, payments made to trash collectors, contractors, etc., and any monies placed in an emergency fund.
While doing your research, you may also want to look into how many lawsuits a neighborhood association has been involved in. Frequent lawsuits should raise a huge red flag, regardless if the association is the plaintiff or defendant. Chances are there are constant problems between the association and the residents, which is obviously something that you do not want to encounter yourself. You can find this information by going to your local courthouse.
Do not forget the importance of word of mouth. Ask other homeowners in the neighborhood about their experience with the association.
It goes without saying that knowing what you are getting into beforehand can save you a great deal of stress in the future. But what do you do if you already live in a homeowner or neighborhood association-controlled community and are experiencing problems? Fighting your neighborhood association can be a very aggravating and difficult process, but if you are patient, diligent and aware of your rights, you have a much better chance of being successful.
If your issue is with an unfair rule, keep in mind that you will be fighting an uphill battle; Neighborhood associations and the courts tend to be of the opinion that the homeowner knew the rules before agreeing to the contract and if he or she doesn't like them, they should just move out. Despite this sentiment, there may be a few things you can do to help your case.
If you want to do something that is against the rules, you may want to ask for a variance. A variance is a formal hearing held to determine if a homeowner would be allowed to violate the rules. The person will meet before the board and plead their case. The board will then review the case and make a final decision. If your request is reasonable, and your neighbors don't seem to mind, the association may be more inclined to cut you some slack.
Another option is amending the CCR handbook to change the rules. Most CCRs have detailed instructions on how to amend the bylaws.
You can also challenge the legality of a particular rule. Neighborhood associations cannot create or enforce rules that are discriminatory, unsafe, or illegal. For example, if a neighborhood association prevents a wheelchair-bound resident from building a ramp in front of his home, it can be argued that the association is in direct violation of the Americans with Disabilities Act.
If your issue with your association is over money, it is very important that you resolve the issue as quickly as possible to prevent increased fines, penalties, and foreclosure. Make sure you keep a record of all monies paid (association fees, fines, etc.) in case you ever need to prove that you actually paid the bill. Homeowners are also protected by the Fair Debt Collection Practices Act, which prevents any creditor, including your neighborhood association, from engaging in harassing or deceptive behavior. If you believe that your association has violated this law, you can file a complaint with your state Attorney General's office.
If you are concerned that repairs are not getting done and that the money set aside for maintenance is being mismanaged, you can demand to see their books. Neighborhood associations are required by law to disclose their financial information.
Many people think they should take their Neighborhood association to court as soon as trouble arises. In reality however, suing your association should ALWAYS be a last resort. In addition to placing a great deal of stress on yourself as well as your neighbors, lawsuits can be time consuming and very expensive. With proper research and mediation, many neighborhood association disputes can be handled without even setting foot in a courtroom.
