I saw an article in the San Diego Union-Tribune a few weeks back (March 19, 2011) that got me to thinkin’. (I couldn’t find the article online, otherwise I’d link to it in this post.) The article appeared in the New Homes section of the paper and was entitled “Operation VA/FHA Homeowner.”
This article was predominantly about Homeowner’s Association (HOA) documents (informally referred to as CC&R’s—which stands for Declarations of Covenants, Conditions and Restrictions). Brian Greenberg, the author of the article, brings up a really good point. He points out that it is important to read the CC&R’s before buying the property so that you can become familiar with what is permitted and not permitted in the complex or by the association.
Generally, once escrow is opened, the buyer will receive a copy of the CC&R’s for review. Traditionally, this is a very thick and intimidating package of materials; so many homebuyers seem to just file the package away without spending time reviewing the information.
Associations have rules related to all sorts of things—many of which may surprise you. For one, there may be rules about pets. There may also be rules about where you can park your car or what color you can paint the outside of your home. There may also be rules about applying for landscaping changes, leaving your garage door open during the day, and even whether you can put a backboard and a basketball hoop outside of your home.
It’s not uncommon for new homeowners to receive a violation notice from the HOA when, unbeknownst to the new owner, they were breaking a rule as laid out in the CC&R’s. Because of this, it’s really important to review the CC&R’s before closing escrow.
The second component of the article (and the part that was a bit vague) had to do with obtaining VA or FHA financing for a property in a condo complex or an HOA. If you are purchasing a condo in an association and using an FHA loan, then you will need to check with your lender to make sure that the FHA approves the complex. Not all complexes are approved by the FHA—so you will really want to have good communication with your lender in order to assure that you are actually able to purchase the property that you like.