Contracts and fine print matter more than ever when you’re buying property. A real estate transaction includes reams of paperwork, but ignoring any of it is risky. If you’re making a purchase of property within a homeowner’s association-ruled community, it’s important to pay close attention to the related paperwork.
An experienced real estate attorney can be a crucial partner in this process. They know what to look for in the paperwork and how that information can affect your purchase.
What’s In Homeowner’s Association Documents?
There are thousands of homeowner’s association-governed communities in Minnesota, and each requires owners to abide by Covenants, Conditions, and Restrictions (CC&Rs). These are the governing documents for the association, which impact each owner.
The contents of CC&Rs include but are not limited to:
- Landscaping requirements that owners must abide by
- Restrictions on renting the property
- Restrictions on pets (such as size, breed, and number)
- Parking rules
- Limitations on home businesses
- Enforcement process related to restrictions: deadlines, penalties
Minnesota’s Common Interest Ownership Act (MCIOA) requires that prospective purchasers receive copies of the association’s governing documents and certain financial disclosures. Reading and understanding these documents is key to understanding the community you are joining.
Separate from CC&Rs are the association’s governing documents, such as:
- Articles of Incorporation
- Bylaws
- Rules and Regulations
Before You Buy
It’s challenging to read and comprehend how all of the bylaws and governance of the community will impact you as an owner, but it’s critical to review the paperwork. Some aspects to pay close attention to are:
- Use restrictions. Things like short-term rentals, pet policies, and business use of your property can contradict your plans for your living arrangements.
- Property Appearance. The HOA board likely reserves the right to approve or disapprove any changes to the exterior of your property, from the color paint you choose for your front door to whether you can build a deck or add solar panels.
- Exterior Maintenance: Homeowners may be required to perform some maintenance, such as grass trimming, fences, or painting. Requirements for property appearance can be very specific.
- Monthly Fees, Assessments, and Finances: HOA owners pay a monthly fee as well as additional sums for larger projects (paving, painting, replacing water pipes, etc.) These fees are mandatory for all owners. However, information about the financial health of the governing organization, upcoming special assessments, and projected cost increases should be included in resale disclosure certificates, not CC&Rs.
- Fines and Enforcement: Fines, civil lawsuits, and other penalties can be levied by the HOA board if a member-owner does not pay dues and assessments promptly or comply with the CC&R terms.
Minnesota HOA buyers should prepare by:
- Getting CC&R documents early: If you’re putting an offer on a property within an HOA, seek out the CC&R documents (from your realtor, title company, or the property seller). If possible, take time to review the documents before making an offer.
- Reading and reflecting on the documents. Give yourself time to digest the information. Do the restrictions fit with your lifestyle and future plans?
- Seeking a legal opinion. A local real estate attorney can decipher the language of the CC&R. This consultation will help you understand your obligations and strategize about potential amendments or necessary disclosures.
- Understand your rights. As a prospective buyer you have 10 days to cancel your purchase after receiving and reviewing the HOA documents.
Local Expertise Matters in Real Estate Law
At Waypoint Law, expert real estate attorneys understand the desire to own an attractive home in a nice neighborhood. Yet these attorneys are also experienced in the complex structures of Minnesota HOA regulations and their fees. Call for a consultation before committing to property ownership.