Real Estate: Gated communities and HOAs

More than 50 million Americans today live in condominiums, homeowner associations, cooperatives and other planned communities. Being part of a community association offers homeowners many benefits and amenities, but is something to consider before buying a home or estate within a gated community.

A Homeowners Association (HOA), is a legal entity created to maintain common areas. These are often the most affordable way to own a home, especially for first-time homebuyers. When deciding whether to enter into one of these "gated communities" you should make the following considerations.

1. The first thing to ask is whether the home that catching your eye is part of a community association. If so, your real estate agent will obtain copies of the governing documents Covenants, Conditions and Restrictions (CC&R), for you to read through carefully.

2. Recognize that member homeowners agree to comply with all governing documents. In tangible terms, these rules apply to architectural guidelines like additions, decks and paint colors, landscaping, maintenance, satellite dishes, fences, parking, pets and more.

3. Get a visual of how these rules and restrictions are actualized within the community by taking a stroll through the neighborhood. Pay attention to how the common grounds are maintained, what parking is like, and what conditions the homes are in.

4. Ask to talk to a member of the elected board or the president of the association. They will be able to give you reasoning behind the governing documents and answer any questions about how they would apply to you. Also talk to people who live in the community. Find out how they feel about abiding by their community's rules and restrictions.

5. Examine the association budget carefully. This budget sets the level of assessments and services available to the entire community. Understand that these assessments are mandatory homeowner dues that must be paid or you risk legal action taken against your property. Look for a reserve fund within the budget that will cover major expenditures, like roof replacements or the resurfacing of private roads. If there is not a reserve fund, then the association will likely impose special assessments on member households - a potentially expensive, unanticipated expense.

6. After examining the CC&R and budget, make sure the home you are looking to buy is not already out of compliance with HOA rules. Failing to do so can result in larger, more expensive issues down the road.

7. If you are environmentally conscious, assess the environmental practices stated in the CC&R. Some communities require the use of fertilizers, pesticides, sprinkler systems and other tools to keep your property in line with community standards.

8. Ultimately, be realistic. Homeowner associations have many benefits and advantages, such as well maintained public spaces and stronger communities. However these associations face the difficult task of pleasing all participating members. This includes potentially controversial community issues, which ultimately requires judgement and decision-making by the elected officials. Ask yourself how you will react when given rules that you do not particularly like or enjoy.