How many times have you heard people say they’ve “fallen in love” with a house? Indeed, it seems that finding a perfect real estate match tends to induce a kind of euphoria that some have likened to those heady early days of romance.
It is our sober duty to remind you that where love leads to marriage, it almost inevitably leads, also, to living among one’s in-laws.
The metaphor works for home buying, too, as “marrying” a home often brings its own version of in-lawship: the homeowners association. As with real in-law relationships, the bond with homeowners associations can make for happy extended families.
And then, well, there are the extended families that are not so happy.
How do you know which one you’re going to get? To torture the romance metaphor just a bit more, think “courtship.” Think “prenuptial agreement.”
In other words, take your time and read the fine print.
“I don’t think a lot of people realize what it means” to be in a homeowners association, according to Donna Reichle, director of media relations for the Community Associations Institute in Alexandria, Va., a not-for-profit group that represents the interests of an estimated 205,000 such groups .
Those who are only vaguely familiar with the term “community association” may know it in terms of condominiums, which would be accurate. But homeowners associations have become a much broader concept, and membership in one now also comes almost automatically with the purchase of a townhouse and a surprising number of single-family, detached houses.
The groups have become so ubiquitous that about 42 million people now live in the associations, CAI estimates. These days, most newly constructed subdivisions and even small “in-fill” properties will form such groups, whose purposes will range from merely arranging to get the grass cut at the development’s entrance to enforcing detailed restrictions on what the owners can do–and can’t do–with their property.
But even the “mere” task of lawn mowing can take a complex turn, according to Dan Bunce of St. Charles, who is in the midst of his second experience with a homeowners association. The first one came upon him unexpectedly.
“We had to start that one from scratch,” he recalls of his former subdivision in Bolingbrook, where he suddenly found himself to be the group’s vice president. “The developer went bust and left common grounds that no one was able to take care of.” These included the entrance to the development, which quickly became unkempt.
“It was kind of a mess. We had to have a voluntary association, so that meant that no one was obligated to pay dues,” he recalls. After he sold the Bolingbrook home, he built a home at the Royal Fox development in St. Charles, where he now is president of his homeowners association, which represents one of four neighborhoods in the development.
The purchase of the home came with a list of convenants and restrictions, and a yearly fee of $175 per lot. The fee covers maintenance and liability insurance for common areas, plus it is intended to fund the promotion of such neighborhood events as garage sales, he says.
Bunce says he knows that many buyers move in without having studied the covenants. “Most of them didn’t look into it. A lot didn’t even know there was an association,” he said.
Bunce said he has made a priority of better communications. “The first thing I have done this year is put out a newsletter to start educating people on what the association is about and what the covenants are about.”
“Although (the covenants) spell out in legal language what is required in the subdivision, the only remedy that is available now is to sue, and we need to find more subdued means.”
And the disagreements can be wide-ranging. For example, some lots in the developments have “no-cut zones” forbidding the removal of trees, Bunce says. Dog runs are not allowed.
Some custom-home communities may have architectural review comittees that can say yea or nay to the appearance of a proposed home, based on standards set up by the developer or homeowners board. After the house is constructed, changing its color may require getting community approval. Then there may be restrictions about what can be put on the lot, from certain types of foliage to basketball hoops to pickup trucks. Television satellite dishes tend to have sparked a lot of debate lately, says the CAI’s Reichle.
“One house mounted it right in front of the garage. We had a bit of a problem with that,” Bunce explains.
Reichle says that written communications such as the ones that Bunce is proposing are critical to peaceful neighborhood coexistence. “We recommend that community associations publish a digest of rules so that they won’t have to go through the legalese.
“(Failure to understand the rules) can lead to a lot of unhappiness. They don’t realize that maybe they can’t have a dog or even have a pet. They don’t realize they might not be able to build a stockade fence around their property; that they might not be allowed to park three cars in the parking lot; or that they can’t hang an American flag in their window,” Reichle said.
Beth Lloyd has seen such disputes and disappointments from various angles–as a real estate agent who advises buyers on the ins and outs of their purchases, as a member of a homeowners association, and as president of the Association of Condominiums, Townhomes and Homeowners Associations in Chicago.
“I tell my buyers to ask for the budget, a copy of the latest audit, the financial statements. Get a copy of the bylaws and the rules and regulations. They have a right to ask that. They have a right to ask if there is any pending litigation,” she says, admitting that some groups are much more forthcoming than others in providing the requested information, and cites her own experience.
“I wrote it in as a condition of my contract that the contract was contingent on seeing that information and approving it. It still took two months of begging before they provided it.
“I looked at the (group’s financial) reserves. I thought they were pretty small,” says Lloyd, who is an agent for Coldwell Banker in Schaumburg. “I had to make some hard decisions.”
Lloyd bought a resale unit in a development that had a measurable track record. For new construction, the considerations may be different.
The Illinois Condominium Property Act specifies much of what an association is reponsible for and says that developers must turn over administration of the community when 75 percent of the units have been sold or three years after the recording of the declaration, whichever is sooner. But the law applies only to the condominium form of property ownership, and it is silent on the subject of associations for single-family homes and for townhouse communities where the land is owned by individuals, even though there may be some so-called “common elements” that have to be maintained and insured.
John G. O’Brien, president of the Illinois Real Estate Lawyers Association in Arlington Heights, says the condo law was developed after the condominium boom–and subsequent abuses–in the 1970s. He says there has been no drive for comparable legislation to apply to other kinds of associations in Illinois, probably because the need just hasn’t arisen.
“I don’t see a push for laws in Illinois similar to the condominium act,” he says, adding that in his view subdivision developers are free to determine the point at which the responsibilities will be turned over to the homeowners association.
Typically, though, that point is stipulated from the beginning. “We have to file our documents with city governments, with whatever financial institutions may be involved, and with our lenders,” explains Buz Hoffman, president of Lakewood Homes in Hoffman Estates.
Early in the life of a subdivision, the development company has the majority of votes in the association and makes major decisions. Buyers should inquire about a likely timeable for the developer to sell the stipulated number of homes and turn over control to the homeowners association. In some developments it could be many years, depending on the size of the subdivision and the pace of sales.
Historically, the disputes that have arisen between developers and homeowners associations have tended to focus on obtaining the amenities (such as tennis courts, pools, etc.) that have been promised by the developer early-on. Sometimes there are disputes about whether the developer is taking too long to turn over control. Other battles have ensued over whether the developer has maintained the property appropriately before turning it over to the homeowners.
Beth Lloyd suggests that buyers may gain some insight about what to expect by inquiring about a builder’s previous developments, and then contacting the homeowners associations there. Even that may yield mixed results, she says. “Sometimes the builder has a good reputation in one community and not in the other. It depends on the eye of the beholder.”
She also suggests that potential buyers could find it illuminating to go door-to-door and ask questions about the homeowners group, both for resale homes and in subdivisions that are big enough to have such a history while sales and construction are still going on. She concedes, however, that few do.
Once into the development and having become members of the association, homeowners may find that, for better and worse, they have inherited a de facto form of government.
The “for better” part likely means that the group functions to unify the community–help newcomers get to know the neighbors, sponsor social events, spread subdivision news. Many groups put out newsletters and some even have home pages on the Web.
Usually they survive on volunteer labor. Bunce says he puts in “more hours than I care to admit” on his association, and he’s now organizing committees that can assume some of the responsibilities.
CAI’s Reichle says that internal disputes–charges of cliquishness and petty dictatorship–are “one of the more common complaints” that her group hears about homeowners associations. Nonetheless, with about 1.2 million people serving on the boards of directors for the various groups around the country, “the number of complaints that actually get out of hand are quite small,” she says.
Indeed, many people look at the groups less as government than as empowerment, Reichle says.
“I like to think of it as an increase of emphasis on personal responsibility. You are not operating under the rules of a municipality as much as the rules that you and your neighbors make for yourselves,” Reichle says. “You proceed from there. These are not documents written in stone. You can update them and modify them. If a majority of residents decide they want to get rid of pet restrictions, they can do that. In a way, it is taking personal control for all those factors.”
Some of the “factors” that are raising their heads in community groups these days include bans on home-based businesses, which some communities are starting to overturn, she says.
Then there are the factors that resolve themselves outside the group, including lawsuits related to the Americans with Disabilities Act and federal fair housing laws. Reichle says that in the last six months there have been at least three of the latter directed at boards.
The most chilling, in her view, is the case of a former condominium association president in Washington, D.C., who said she was being racially and sexually harassed by another resident in the public areas of the condo property. The woman sued her board for not taking action against her neighbor, although the board had written him letters urging him to stop his behavior.
She sued the condo board for failure to take legal action against the other unit owner, who had pleaded guilty to a charge of making threats. A federal district court judge upheld her right to sue under the Fair Housing Act. The condo board then settled out of court, agreeing to buy her condo for $52,000 and pay her $550,000 in damages.
It is, of course, an extreme example. “We are not trying to be policemen,” says Bunce of his homeowners board. “It is far down on our list of things to do. The No. 1 reason we are here is for landscaping. That’s the bulk of our assessment. No. 2 is going to be insurance costs, for liability coverage.”
Nonetheless, CAI has publicly urged its members to consider that the growth of community associations raises questions about the role they play in society.
“We’re progressing from disputes over paint colors and treehouses to issues that test the boundaries of community-association governance,” in the words of CAI past president Robert M. Diamond, a lawyer in Falls Church, Va.
O’Brien agrees. The president of the Illinois Real Estate Lawyers Association says that advising associations has become a legal sub-specialty.
Nonetheless, he says, real estate has inspired disputes since long before the rise of any neighborhood group. “I’m firmly convinced that the greatest thing that will make your house a happy place isn’t how big the master bedroom is, but who lives next-door to you.”
