When buying property in a common interest development (“HOA”), one automatically becomes a member. Here are 14 items to consider before closing escrow:
- Read the CC&Rs. CC&Rs (Covenants, Conditions & Restrictions) are an agreement between all association members, binding each when they take ownership. Read this document before taking ownership, not after. Look for restrictions regarding how your property is used. Are there pet limits? Can you park RVs in driveways? In a multistory building, are there restrictions against hard floors? You need to know first, not later.
2. Review the reserves disclosures. Prudent associations set aside money each month to offset the ongoing deterioration of major capital components (roofs, asphalt, paint, etc). Associations with little money saved in reserves may require imposition of special assessments against the members to fund major refurbishments. Underfunded reserve accounts are a form of hidden debt not reflected on the balance sheet.
read more at: https://www.sandiegouniontribune.com/business/story/2021-09-04/hoa-homefront-buying-into-a-hoa-read-this-first
Posted in Real Estate
Tagged cc&r, hoa
Associations typically have five different documents that very much affect association living and governance. In addition to CC&Rs ( Covenants, Conditions, and Restrictions), most associations have Articles of Incorporation, bylaws, operating rules and either a condominium plan or subdivision map. Unfortunately, most homeowners in common interest communities do not read these documents before they close escrow.
A corporation is created when articles of incorporation are filed with the state. In earlier years, articles of incorporation often contained significant limitations on association and board powers. However, all common interest development associations are not incorporated, and those will not have articles. Not all incorporated associations use their legal name. The bylaws will usually on the first page state the association’s correct name and indicate whether it is a corporation. The Secretary of State can provide a duplicate copy of articles, and its web site will indicate if the corporation is still in good standing – visit www.businesssearch.sos.ca.gov.
Bylaws, unlike articles of incorporation, are not filed with any public agency. Bylaws address governance topics such as the powers and limitations of the board, information on membership meetings, and board eligibility. Bylaws should not address the property, but how the corporation governs.
read more at: http://www.sandiegouniontribune.com/business/economy/sd-fi-hoa-1125-story.html
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