First Time Home Buying 101: HOA & CCR's

Briefly, I'll speak about HOA's (Home Owner's Associations). Generally, these are used if you purchase a townhouse or condominium. Let's use a condo as an example: When you purchase a condo, what you own is the interior space. Therefore, the grounds must be maintained, perhaps the building exterior painted. It will also include water, sewer and garbage pickup. When you make a purchase here, there will be a HOA manual for you to read. Be sure that you read all of it! It can include a lot of rules which you will have to abide. You are paying a fee for this which can be quite substantial and can be increased (depending on your specific HOA).

I lived in one for awhile, the HOA fee was $300/ month! It did include a lot of things, but the rules were pretty stiff. They regulated all the parking, when you could do your laundry or run the vacuum cleaner. If for some reason you ran over that time, etc., you could always count on someone complaining and receiving a scolding call from management.

Read the rules! HOA's have a lot of power, including eviction. Know what they can do if you are late on your fees. It might be easier to deal with your mortgage company than your HOA.

• Ask them for a financial statement and their credit report.

CC& R's (Covenants, Conditions and Restrictions.

You are far more likely to find this when looking for a home. These are when a developer designs a "planned community". When establishing the "development", they set up CC& R's. Basically, when the homes are sold, the homeowners are responsible as an association for compliance of the CC& R's. Some people really like having them, it is actually similar to a condo HOA in some respects. For example, if their is a community swimming pool or park that needs maintaining, all the homes in the development would contribute "fees". You must read and know what the conditions and restrictions are.

The advantage to this is all homes are well-maintained. It is very unlikely that you would have your property values decrease by the neighbor that decides to paint their house "hot pink and yellow" or have junk cars all over the property. The downside, and why some people really don't want to live in these developments is because they don't want to be told what to do on their own property. These CC& R's are a condition of title on this property, which gives the homeowners association a lot of power (legal power) if you do not abide by them. You can be fined and probably a lot worse.....so read ALL OF THE AGREEMENT! Rules often include, but not limited to;

• The colors you can paint your house,
• How many pets you can have,
• How long the grass is allowed to grow before mowing,
• How many cars can be in your driveway and/or no street parking
• Some restrict working on your car,
• Noise restrictions
• Fences, style, height, etc.

There can be many more (or less), it all depends on the development. But as you see, this is a time when you don't want to miss any of the fine print! Don't take this lightly, if you have questions or concerns about it seek the advise of a real estate lawyer.