6 Home Owner Association rules that can come back to bite you

When you buy a home or a condo in Summit County, Colorado, you probably are joining a Home Owner Association, whether you want to or not.  All HOAs have rules by which you must abide.  One of the things you will be able to do is read the HOA documents prior to closing on the sale.  If you don’t like the rules, you will have the opportunity to back out of the purchase, provided you do so within the time frame specified in the contract.  What happens if you don’t read the rules?  It is possible that they will come back to bite you once you close on the property and try to do one of the things that are not allowed. 

What rules are there that might make you decide not to buy a home that you love? 

• Pets.  Some condo and townhome complexes don’t allow dogs at all.  Most only allow owners, but not renters, to have them.  Many limit the number of pets and if you have more than two dogs, you may not be able to live there, or at least not have the dogs live there. 
• Fences.   Of course, there is no question that you cannot fence off areas for pets in a condo complex, and many people might assume that a townhome wouldn’t allow it.  But what about a single family home?  Most subdivisions in Summit County do not allow fences.  Where they do, there are often many restrictions on the fence placement, height and materials.  It probably needs approval from the Architectural Review Committee, if there is one.
• RV and boat parking.   Don’t assume that you can park your boat or RV in your driveway or in the yard next to your house.  The same thing goes for a commercial vehicle that you might own.  Be sure to check neighborhood restrictions if it is important to you.  Most towns won’t allow it at all, and if you need a place to park them, you might want to look outside town boundaries, in the County.  Even then, don’t assume it is ok.
• Painting your home.  The majority of HOAs specify what colors you may paint your home.  The required colors are probably earth tones, and often you must get the color approved prior to painting your house.  If you live in a duplex, you will possibly have to have the neighbor living in the other side of the duplex approve your color change.  They may also have to give their approval if you want to add a hot tub or deck.  Be sure and read the party wall agreement.  In many neighborhoods, remodeling plans must be approved by the Architectural Review Committee, and in townhome and condo developments, you don’t own the exterior of the building and therefore, may not do anything to alter it.  We are not alone in having paint color restrictions.  See what Thesa Chambers of Sunriver Oregon wrote on the same subject.
• Prepaid dues for  Reserves.  Many condo and townhome complexes (especially newer ones) require that 3 months dues be paid at closing into a Reserves account for the HOA.  You may or may not get this money back when you sell the property.  Again, read the HOA documents and make sure that you understand whether this is a requirement or not.
• 2% withholding by the State of Colorado.  This is  a State requirement rather than a Home Owner Association rule, but it surprises many people.  It only applies if you are an out of state Seller and you have made a profit on a sale in excess of $100,000..  Let’s say you live in Georgia and own a condo at Copper Mountain.  When you sell it, the Title Company is required to withhold whichever is less: 2% of the purchase price  or all the net sale proceeds and you must file a state tax return in order to get any of the funds back.  There are a couple of ways around it; you must sign an affirmation that you are not making a profit,  that it is your primary residence, or that it is owned by an entity with a place of business in Colorado, or that it is owned by a partnership.  You are not liable for the 2% withholding if you are doing a 1031 tax deferred exchange into another property.  Of course, this doesn’t affect you as a Buyer, but will if you live outside Colorado and are buying a second home or vacation home. 

It all comes down to reading the documents provided to you by the Title Company and your REALTOR (R).  Hopefully most of these items will be disclosed to you prior to your making an offer on the property.  Talk to neighbors where possible, and contact a representative of the Home Owner’s Association.  Most HOAs have websites, and the majority of the documents are online.  We have posted all of which we are aware on our mountain-living.com website and you can link to them from there. 

If you are interested in seeing what HOA rules are in other parts of the country, see:

The HOA will have it’s way by Paula Henry

Home Owner Assocations are love hate relationships by Missy Caulk

Homeowner Associations in Camarillo, Are they for You? By Mana Tulberg

No Pay No Stay And Other HOA Rules In The Woodlands by Stephanie Edwards-Musa

Sunriver Rules and The Condo Rules - They May Make A Difference in Where You Buy! by Thesa Chambers

Posted by Summit County Real Estate Agent Joanne Hanson at 5:55 pm in Summit County Real Estate. Subscribe to comments RSS feed.

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