A homeowners association's CC&R serves an important purpose in preserving peace and order and property values in the community. Many homeowners don't quite understand what a CC&R is and how it can affect them. While associations can have varying restrictions, most carry penalties for noncompliance.
A homeowners association’s CC&R serves an important purpose in preserving peace and order and property values in the community. Many homeowners don’t quite understand what a CC&R is and how it can affect them. While associations can have varying restrictions, most carry penalties for noncompliance.
A homeowners association is established and regulated by its governing documents. One of these governing documents is none other than the CC&Rs.
What is a CCR?
Short for Covenants, Conditions, and Restrictions, the CC&Rs are foundational guidelines that govern homeowners’ behavior and property use in an HOA. In other words, they dictate what homeowners can and can’t do. These legally binding rules help maintain consistency and harmony in a community.
Most homeowners associations come with a set of CC&Rs. When a person buys a home in an HOA or planned development, they are most likely joining an association. By doing this, they agree to follow the covenants and restrictions in the community. Since the objective of a CC&R in real estate is to preserve property values, homeowners are the ones who stand to benefit from them in the long run.
More often than not, HOA CC&Rs are reasonable and easy to follow. The HOA may require homeowners to keep their lawns mowed, which most owners would do without CC&Rs.
Other times, owners may find that an HOA’s rules interfere with their plans. For example, an owner may want to install a fence, but the HOA’s rules don’t allow it. Violating the CC&Rs can result in several penalties, including monetary ones. In some cases, an HOA may even take legal action. As such, potential buyers should review an association’s CC&R first before finalizing the purchase.
Specific covenants and restrictions tend to vary from community to community. This is because what may work for one association may not necessarily suit the needs of another. That said, HOA and condo CC&Rs tend to fall under more general and common categories, including but not limited to:
Buying a home in an HOA means accepting the covenants and restrictions of the community. Homeowners even sign documents upon closing on a home, including a document stating that they have read the homeowners association CC&R and agree to comply with them. Thus, owners should not be surprised when they receive a violation notice after breaking a rule.
Depending on state laws and the CC&Rs, an HOA can enforce several penalties for violations. These include the following:
An HOA usually serves the owner with a violation notice and allows them to correct the violation, especially if it’s their first offense. If the violation isn’t cured, the HOA will take further action. Owners typically get to appear before the board at a disciplinary hearing. Since procedures and requirements can vary, it is important to check state laws and the HOA’s governing documents.
One CC&R that applies to most, if not all, HOAs is the obligation to pay regular dues. Homeowners pay dues monthly, quarterly, or annually to meet the community’s needs. The HOA uses these dues to pay for various expenses and keep the reserve fund at an appropriate level.
The CC&Rs will usually outline the financial obligations of homeowners, including the fees they must pay, how these fees are calculated and collected, and any penalties for nonpayment. Penalties can range from charging a late fee or interest rate to placing a lien on the home.
Depending on the powers of the HOA, foreclosure proceedings can quickly follow. That means homeowners can lose their homes if they fail to pay their dues and assessments.
Many homeowners and board members use the terms CC&Rs and bylaws interchangeably. However, they are not one and the same. As a refresher, here is the CC&R meaning: CC&Rs are foundational guidelines that govern homeowners’ behavior and property use in an HOA.
In contrast, the bylaws of an HOA dictate how the association operates. They consist of important information required to run the association as a corporation. The bylaws typically consist of the following:
An HOA’s CC&Rs are crucial for maintaining consistency and order in a community. They also help preserve curb appeal as well as property values. Homeowners who purchase properties in an HOA agree to abide by these regulations or else face certain penalties. As such, before purchasing a home, buyers should review the CC&Rs to understand what they are potentially getting into.
Navigating the ins and outs of an HOA’s governing documents can come as a challenge for an inexperienced or self-managed board. An HOA management company, though, can help. Start looking for one in your area using our online directory!
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