By CHUCK PARRETT
If you are a baby-boomer empty nester, you may be thinking about moving out of the city or town where you currently live and work and heading for one of the nice subdivisions in the gorgeous rural boonies of Montana.
Or, perhaps, you like living in the city, but you want to cut way down on typical homeowner chores in your senior years by moving into a condominium where shoveling snow and cutting grass are taken care of for you.
In either case, you need to become familiar with Homeowner Associations (HOAs) and their companion sets of regulations called, Covenants, Conditions, and Restrictions (hereafter just called Covenants).
HOAs have become wildly popular throughout the United States. From about 1964 to 2010, they’ve grown in number from about 500 to over 300,000 and now govern about 62 million residents. This large spurt in growth was fueled in part by the mass movement of families from cities and towns to suburban locales with open spaces and little government control on building or zoning, and by the booming popularity of low-maintenance condominium living.
To ensure that these private residential and condo developments would be attractive to buyers, developers required that homeowners form organizations that would uphold agreements (Covenants) among property owners about acceptable activities, buildings, and landscaping of all properties in a subdivision or condo complex.
Those agreements about acceptable activities and what you can and cannot do with your new home and property are good things, right?
Well, your answer to that question may depend partially on your philosophy about individual liberty to do whatever you want to your own property versus your wanting to ensure that your neighbors don’t create eyesores or other conditions that detract from the value of your home and property.
Perhaps to a lesser degree, your satisfaction with your HOA and the covenants may depend on how strict the Covenants are and how rigorously they are enforced.
In Montana, HOAs are private, unincorporated associations that may also be set up as Limited Liability Corporations (LLC) for tax purposes. Whenever people buy lots for building homes, or buy already-completed homes, in the subdivision or condo complex, they become members of the association and are subject to the Covenants established for the association.
In addition, members are required to pay homeowner fees that pay for maintenance and use of any open spaces in the subdivision, such as playing fields or parks or maintenance of bridges and roads (in rural Montana snow plowing in the winter is often the single biggest expense for an HOA).
In condo complexes where the biggest draw is having someone else take care of many homeowner chores, homeowner fees are used to pay for those chores.
In many condo complexes, homeowners are responsible for only the interior of the condo. Thus, any siding, painting, or work on the outside walls is carried out by the association, and the HOA fees are necessarily steep.
In addition, some rural HOAs and most condo HOAs have buildings for recreation and meeting purposes and perhaps hiking and bike trails and swimming pools (many are indoor in Montana).
Required membership fees for an HOA depend upon the services provided, the size of the subdivision, and how up-scale and pricey the homes and provided services are.
Amenities like common-use swimming pools, paid building insurance coverage (typically only for condos), yard landscaping services and snow removal, or even golf courses, can be very expensive.
A study based on American Community Survey Records found that national monthly HOA fees averaged $331 in 2015. In Montana, HOA fees in rural subdivisions are typically much less than the national average.
I could find only a handful of reported rural HOA fees, and they averaged a relatively paltry $65 per month.
Most rural HOAs also do not have the pricey amenities listed above. HOAs for condo complexes in Montana have fees that are about the same as the national average.
HOAs have a board of directors or officers that carry out administrative duties for the association. Included in these duties are the billing and collection of homeowner fees, paying HOA expenses, keeping records for all HOA activities of the board, and holding annual (or more frequently as required) homeowner meetings.
The meetings provide an opportunity for members to discuss various homeowner or property issues. Homeowners may have a chance to vote on proposed fee changes, including special assessments to take care of special maintenance or repair issues.
Homeowners may also get to vote on selection of new board members or penalties proposed by the board for violations of Covenants. Rules for carrying out all administrative duties of the board and for required voter majorities are spelled out in an HOA’s established by-laws.
So let’s talk about the Covenants. These are primarily intended to keep the subdivision or condo complex area, including individual homes, neat and attractive to other homeowners (and potential future buyers). To this end, they generally have restrictions about the size, construction materials, and design of houses in rural subdivisions.
There may also be restrictions on paint colors, including roofing color.
For condo complexes where all buildings have already been constructed, there are regulations about allowable building changes.
HOAs commonly have Architectural Review Committees (ARCs), usually composed of several volunteer homeowners, that require property/homeowners to submit plans for any new buildings or structural changes to existing buildings for review and approval.
Many HOAs have restrictions on fences, and subsequent ARC approval of fences is usually required. Many Covenants also restrict automobile parking to driveways only and may also restrict RV parking to garages only.
Activities Covenants may prohibit include placement of signs and billboards, commercial or business uses, and keeping animals other than household pets.
So, those are a lot of dos and don’ts. Penalties for violations can be fines and lawsuits. Unpaid fines or HOA fees can result in liens on the property and even foreclosure.
To prevent buyer’s remorse over HOAs and their Covenants, real-estate and mortgage pros offer the following advice.
Read the HOA Covenants and by-laws carefully
Copies of Covenants and current HOA fees are readily available from any MLS realtor trying to sell the property.
If you love the home and property, but you really want to add a storage shed and paint the front door a nice blue color, make sure you can.
Find out the name of the HOA president
Give the president a call to ask about the covenants and how they are enforced. Ask about the HOA fees and how they have changed over time. Have there been special assessments because of particular problems? You can also ask for a copy of the latest HOA meeting minutes to see what neighborhood concerns have been discussed. If the timing is right, maybe you can even attend an HOA meeting.
Talk to Current Homeowners in the Development
If you know a homeowner in the subdivision, chat with him/her about the HOA and Covenants. If not, maybe a casual stroll through the neighborhood will find some folks outside willing to talk about Covenants and neighborhood issues.
Keep Up with Your Fees
After moving in to your country dream house or cool city condo, make sure you pay your homeowner fees on time. Also, communicate with your neighbors and attend the scheduled HOA meetings.
Even though you give up some freedom when you buy a house or condo governed by an HOA and Covenants, research in 2012 found that 70 percent of homeowners nationwide were happy with their HOA communities. When asked to name the worst aspect of their HOAs, 15 percent named restrictions on exterior improvements, while 9 percent said paying HOA fees.
The good news is that 34 percent said nothing bad about their HOA.
Ultimately, know what you’re getting into with an HOA, but when you do, just kick back and enjoy the golden years in the Montana countryside or in that condo you never have to paint. MSN