by Michael W. Flynn
First, a disclaimer: Although I am an attorney, the legal information in this podcast is not intended to be a substitute for seeking personalized legal advice from an attorney licensed to practice in your jurisdiction. Further, I do not intend to create an attorney-client relationship with any listener.
Happy new year, loyal listeners! Today’s topic is homeowners' associations, or HOAs. Jason from North Carolina wrote:
I have a question regarding homeowners' associations in California. My wife and I are thinking of moving from the east to the west coast and purchasing our first home. From all of the home listings that we have reviewed there appears to be home owner fees that range from around $100 to $300 per month. We are concerned with the cost of houses in southern CA so we would like to know if there is any law that requires you to be part of the HOA. Are we legally required to join the HOA when we purchase a house? Also, what laws give the HOA the right to tell my wife and I how we can decorate our private property?
Simply put, property rights and laws in California are wacked out. Part of my private practice is dedicated to property disputes, so I understand how frustrating these issues can be. The short answer is that, yes, you can be forced to join the HOA.
A large amount of property in California, especially in urban areas, is located within “common interest developments,” which are forms of real estate where each owner holds exclusive rights to a portion of the property, and shared rights to common areas. A common example is a condominium building. You buy the exclusive rights to your specific apartment, and share the common areas, such as the lobby, mailroom, gym and courtyard, with the other owners. You can exclude the other owners from your apartment, but share the common areas with the other owners. Another example is a planned development, where the owners typically hold exclusive rights to an entire house detached from the other houses, but share property rights with respect to common driveways and green space.
In California, the vast majority of these common interest developments are controlled by the Davis-Stirling Act. The Act controls the formation and operation of common interest developments, and also governs the creation of HOAs. An HOA is an incorporated or unincorporated entity that oversees the management of a common interest development. A group of governing documents, often called a declaration of covenants, conditions and restrictions, aka CC&Rs, dictates how the HOA operates, and what powers they have, including how assessments can be levied and what restrictions the HOA can place on your ability to decorate.
Jason’s first question is whether he can be forced to join the HOA. The simple answer is that, yes, you can be forced to join an HOA if the property you are buying is governed by CC&Rs that require it. If you want to buy a house, and that house happens to be part of a common interest development, then you must abide by the CC&Rs. Almost all common interest developments require CC&Rs by statute. If you buy a house that is not part of a common interest development, then no law forces you to join any association; it all depends on the property.
The reason that the CC&Rs can bind you is that CC&Rs are considered to be covenants that run with the land or, alternatively, equitable servitudes. The precise definition of these legal terms is not important. For the purposes of this discussion, it is enough to say that the rights granted and responsibilities imposed by the CC&Rs remain with the property even after it is sold or transferred.
Jason also asked whether the HOA can dictate how they decorate. The simple answer is yes, the HOA can do whatever they want so long as the CC&Rs allow for it. Now, an HOA cannot break other laws in doing so, or act in a discriminatory manner. But, almost anything else is fair game. Think of Martha’s Vineyard. If you have visited, or ever intend to, take note of the color scheme of the houses in the main part of Edgartown. You will notice that all the houses are white with black shutters. This is an example of a covenant that requires the owners to act in a certain way. If you want one of those gorgeous houses, you have to play by the rules that come with the house.
But, buying a house subject to the rules of an HOA is not necessarily a bad thing. Many HOAs use HOA funds to keep common areas in excellent and beautiful condition, or improve the value of the building as a whole. Your investment will increase with no physical effort; you effectively pay the HOA to add value to your investment. However, HOA disputes can be … messy.
It is a personal choice, with many considerations, whether to buy property subject to an HOA. Only you can decide if the burdens are worth the benefits. But, the law does require you to join the HOA if you purchase property subject to the Act.
Thank you for listening to Legal Lad’s Quick and Dirty Tips for a More Lawful Life. Be sure to check out all the excellent Quick and Dirty Tips podcasts at QuickAndDirtyTips.com.
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