A homeowner’s association (“HOA”) will generally have benefits and drawbacks that should be completely understood before purchasing a new home. If you are considering a home purchase with an HOA, you need to make sure you know and understand all rules and regulations under the covenants, conditions, and restrictions (“CC&Rs”), have an accurate accounting of the total financial commitment, and a clear understanding of how the HOA operates. It’s not easy to review all the documents required, but this is necessary in order to fully understand the current and complete workings of an HOA. The effort to get a full understanding before you purchase a new home can save you the frustration and pain of looking for a new place to live shortly after moving in. Here are some important things to know about HOA CC&Rs in Arizona before a home purchase.
Get All HOA Documents
The first thing you should do if you are considering purchasing a home with an HOA is request a copy of all association documents. This can be a long list and will require some extensive reading to get through all documents for the average HOA. You will need a copy of the articles of incorporation, bylaws, rules, regulations, financial documents and the Declaration of CC&Rs. The regular HOA meeting minutes going back a year or more can provide some insight into how well the HOA is functioning for the members. Look for issues and disputes that regularly arise. Taking the time to review how the HOA was formed, how it operates, the people involved and how it can evolve in the future will give you valuable insight into whether this is somewhere you want to live.
Understand All Costs and Fees
Every HOA has regular fees that pay for common area expenses. These association dues should be clearly detailed and can range from small monthly payments to larger quarterly assessments. Start your evaluation of the HOA for a potential home purchase with a full accounting of your upfront costs and total yearly fees.
Homeowner’s associations will also have a plan to cover emergency expenses through special assessments. These can range from an automatic assessment to something requiring a majority vote. Many HOAs in Arizona will operate under an agreement for majority vote of board members to approve an additional assessment to all members. If you are considering purchasing a home within an HOA, reviewing the association’s financial records will allow you to see if the association has increased dues or approves emergency assessments with any frequency.
The HOA can levy fines and late fees. Make sure you understand all details of when these late fees and fines can be assessed to members. Late payments on assessments will almost always incur a financial penalty. Fines can also be assessed for breaking any rules and regulations in the CCRs. You should understand the amounts for potential penalties and the process and timeline for collections. Arizona Revised Statute 33-1807(A) declares HOAs have the option of foreclosure and can auction the home if assessments and dues are more than $1,200 or 12 months delinquent, whichever occurs first.
What Services Does HOA Provide?
Typically, the HOA will cover the cost of common area maintenance. The included services will vary depending on whether you are part of a condominium or single-family association. Condo fees will generally cover almost everything in the common areas. These fees will cover the cost of landscaping, pool maintenance, and building repairs. Single-family homeowner’s associations will usually cover the cost of common areas, but the individual homeowners will be responsible for the maintenance of their property and there will likely be fewer common areas. The HOA can typically enforce maintenance standards in single-family associations. Single-family association maintenance standards represent added cost and time commitments. Make sure you understand all HOA standards and what it will cost to maintain your home.
The attorneys at MacQueen & Gottlieb can review all HOA documents before a potential home purchase in Arizona. Our firm can advise on all future obligations and help a client get a better understanding of any potential pitfalls and risks. MacQueen & Gottlieb attorneys routinely handle HOA issues and claims in Arizona. Contact us today at 602-533-2840 to schedule an initial consultation or make an appointment online.