What You Need to Know Before Buying in a Common Interest Community

By: Michael M. DiCicco, Esq.

So, you are going to buy a single-family home, townhouse, or condominium that is in a “Common Interest Community.” Don’t worry, you are not alone. According to the Community Associations Institute, one in five Americans live in Common Interest Communities.

Your rights and duties as an owner in a Common Interest Community are controlled by a Homeowner’s Association (“HOA”). HOA’s often receive negative press, usually because some overzealous property management company prevents a resident from putting up an American flag or fines the parents of a child for playing on a lawn dedicated to open space. The negative press does not reflect how most people feel about living in Common Interest Communities.

A recent study found that 90% of people who live in Common Interest Communities and belong to an HOA have a positive or neutral opinion about their housing and only 10% have a negative opinion. It is anticipated that more and more people will choose to live in Common Interest Communities, particularly condominiums and townhouses, as baby boomers reach retirement age and housing costs rise.

This article talks about the basics of these communities and the HOA’s that govern them.

What is a Common Interest Community?

• A Common Interest Community is a planned residential development that is comprised of single-family homes, townhouses, and/or condominiums. The residences are individually owned, and the homeowner is required to insure and take care of the residential unit. The Common Interest Community is also often comprised of common elements like roads, open space, and recreational facilities such as pools, lakes, gyms and club houses. A Common Interest Community is governed by a Homeowner’s Association.

What is a Homeowner’s Association?

• A Homeowner’s Association, often abbreviated “HOA,” is a private organization that is founded by the developer of the Common Interest Community to manage the community of residences. Eventually, the developer transfers control of the HOA to the residents of the Common Interest Community who then elect a Board of Trustees to manage the community.

How is a Homeowner’s Association governed?

• Homeowner’s Associations are governed by a Board of Trustees. The Board is elected by the owners of the residential units in the Common Interest Community. The Board is responsible for creating the budget, assessing dues and special assessments, maintaining the common elements, and enforcing the Rules and Regulations of the HOA. The Rules and Regulations of the Common Interest Community are set forth in the Master Deed, By-Laws, and Rules and Regulations.

What are the Master Deed, By-Laws, and Rules and Regulations?

• The Master Deed, By-Laws, and Rules and Regulations are documents that govern the Common Interest Community. All purchasers of residences in a Common Interest Community will be provided with these documents. The documents lay out what property constitutes the common elements and how the common elements are to be used. The documents also define the powers of the Board of Trustees, how the Trustees are elected, and how disputes between residents and the Homeowner’s Association are resolved. Perhaps most importantly, these documents set forth in the Rules and Regulations address among other things, the use of recreational facilities, planting of trees and shrubs, the number and type of pets allowed in a unit, where residents may park, and how much in dues and special assessments residents are required to pay. Violations of the Rules and Regulations can result in discipline to be imposed by the Homeowner’s Association. That discipline can include fines and suspension of privileges to use recreational facilities.

Conclusion

• Common Interest Communities appeal to a growing number of people. By agreeing to abide by the Rules and Regulations of an HOA, homeowners give up some of the freedoms that they may enjoy outside of a Common Interest Community. Friction sometimes results between residents and Homeowner’s Associations as a result. That friction is best avoided when the HOA acts consistently and according to clearly articulated policies and Rules and Regulations contained in the governing documents of the Common Interest Community.

If you have any questions related to ownership in a Common Interest Community and the respective rights and duties of owners and the Homeowner’s Association, please contact Michael M. DiCicco at [email protected].