What are CC&Rs?

If you’re planning to buy a home in a condominium or planned community in Arizona, you will be a member of the homeowners’ association (HOA). Your HOA will have a recorded document spelling out your rights and obligations and the basic rules that govern the association. This document is commonly referred to as a Declaration of Covenants, Conditions, and Restrictions (CC&Rs).

 Gathering the Facts About the CC&Rs

HOAs have their benefits and drawbacks. It is important that you understand the CC&Rs, your rights and obligations (both financial and otherwise), and how the HOA operates.

Reading through the CC&Rs can be a tedious and time-consuming task but there is vital information in this document that you might want to know before you buy your home. Here are some important steps you can take to make an informed home-buying decision.

Requesting a Copy of All HOA Documents

If you are considering purchasing a home with an HOA, we strongly recommend you request a copy of all association documents. The CC&Rs are also available through the county recorder. But you also may want to read through the bylaws, any rules and regulations that the HOA has established, some recent financial statements, and possibly even meeting minutes of recent board meetings to see how the HOA operates (or how dysfunctional it might be). The meeting minutes should give you some insight into how the HOA functions for its members, how often they meet, when the last election was held, and how well or poorly the board functions. Your research into the background of the HOA is important as you decide whether or not this is somewhere that you can see yourself living happily.

Members are entitled to all of these documents. So if you have not yet completed the purchase, you should be able to ask the seller to provide these documents if they are not otherwise available.

Understanding the Financial Responsibility

Every HOA comes with regular fees that are used to pay for expenses related to common areas. These fees and dues should be explicitly outlined for you. Some initial questions to consider are:

• Are assessments paid monthly, quarterly, or annually?

• What is the amount of regular assessment?

• How frequently has it increased in the last few years?

When considering purchasing a home, you’ll want to start your research into the fees beginning with the upfront costs required and the total yearly fees. This will give you a good idea of the financial responsibility that you can expect. 

You also will want to consider special assessments. Special assessments are, as the name suggests, special charges that an HOA can impose on homeowners. This includes expenses for emergencies or other unexpected costs. The CC&Rs should be able to tell you whether the members, or the board, can adopt special assessments and, if so, in what circumstances. The existence of numerous special assessments may be a red flag for the association. Meeting minutes can also tell you whether attempts have been made to pass special assessments, giving you an indication of whether there might be some financial issues in the community into which you’re moving.

You’ll also want to see if the HOA has a reserve account. A reserve account is a savings account where HOAs squirrel money away to save for long-term capital improvements such as road improvements, roof replacement (in the case of a condominium), or community pool upgrades. A special assessment may be an indication that an HOA has an underfunded reserve account that it is trying to supplement.

The best way to gain insight into the financial operations of your potential HOA is to review their financial records and see if they increase dues or approve emergency assessments regularly.

The final issue to consider are fines. Is there a fine policy and, if so, what is it? How frequently are fines imposed and for what types of CC&R violations? Do the meeting minutes reflect a number of people asking for the HOA to waive fines? If so, this may be a community whose board liberally imposes fines.

Getting Familiar with the Services the HOA Provides

Many homeowners enjoy living in an HOA community as there are many included services. Typically, the HOA mainly covers the cost of common area maintenance, but this will vary depending on whether you’re considering living in a condo or a single-family association.

Condo fees generally cover everything in the many common areas. Things like landscaping, pool maintenance, building repairs, etc. are all covered by the HOA. For single-family communities, the common areas are usually covered, but the individual homeowner is generally responsible for maintenance on their own property. There are also fewer common areas in single-family situations.

Be sure to fully review your HOA documents so get a full understanding of what your potential homeowner’s association will cover and what you’ll be responsible for as the homeowner.

Contact Dessaules Law Group for Document Review and Legal Advice

The attorneys here at Dessaules Law Group can review all HOA documents before you purchase a home in Arizona to ensure that you understand the full picture. We can advise on all future obligations and help you to understand any potential risks or pitfalls associated with the agreement.

We are highly experienced HOA attorneys. Contact us today to schedule a consultation.