Types of regulations found in CC&Rs
Now that you know a little bit more about what CC&Rs are, the next step is to look at some common examples of covenants, conditions, and restrictions. With that in mind, we've laid out some common CC&R rules below to give you a sense of what you might be subject to if you buy a property that has a set of these regulations in place.
- Many communities have a CC&R rule that regulates the colors that can be used to paint your home's exterior or a rule specifying that the exterior of your home must be kept up to a certain standard.
- Many have a requirement regarding the consistent upkeep of landscaping.
- Many include guidelines for the proper disposal of trash.
- Many include pet rules or restrictions on the types of pets that are allowed in the community.
- Many also have guidelines pertaining to exterior structures like fences or basketball hoops.
- Many have guidelines about "quiet hours" or regarding activity after a certain time of night.
- Many have parking guidelines or restrictions.
However, it's crucial to understand that even though CC&Rs are often very subjective, your homeowners association or planned unit development does need to comply with the law. In light of that, discrimination against any particular group protected under fair housing laws is not allowed.
Common penalties for violating CC&Rs
Another important thing to note about CC&Rs is that homeowners associations typically have the right to enforce compliance with these rules. While they can't take corrective measures or actively change anything on your property without giving you proper notice first, they can enforce penalties for not following rules. Here's a list of common penalties you might face if you violate your community's covenants, conditions, and restrictions.
- Fines: The first penalty for violating your association's CC&Rs is usually a monetary penalty or fine. Although, typically, associations are required to give you notice of the violation and specific timelines for correcting the issue before they can levy the fine.
- Suspension of privileges: If you do not correct the issue after the fine, your association may move on to the suspension of privileges. This means that if your membership in the association comes with any amenities like the use of a pool or gym, your right to utilize them could be suspended until you achieve compliance.
- Forced compliance: As the name suggests, forced compliance occurs when the association takes corrective measures to fix whatever is wrong with your property. Typically they can only do this with safety issues, and they must give you proper notice first.
- Legal action: As a last resort, many associations may take legal action against you if you violate the rules and regulations in their CC&R document. In order to keep these disputes from clogging up the court system, many states require that mediation be used first. However, on some occasions, these disputes do result in a legal battle.
Tips for dealing with CC&Rs as a real estate investor
As an investor, you're going to have a unique set of concerns when it comes to dealing with an association's CC&Rs. To that end, we've laid out some tips for you below.
Request a copy of the document before you make an offer
Before you buy in an association or a planned unit development that has CC&Rs, you're going to want to make sure to read over the document carefully. With that in mind, request a copy from the association before you make an offer. That way, you'll have time to consider whether you feel you can comply with the regulations put in place or if it might be better to look for other options.
Screen your tenants with care
If you do decide to buy in the association, you're going to need to make sure to screen your tenants carefully. Believe it or not, many associations hold the property owner responsible for their tenant's actions. To that end, you're going to want to do your best to ensure that you rent to someone who won't have a problem following the rules.
Consider joining the HOA board
If you have multiple properties within the association in your portfolio, you may want to consider joining the HOA board. Since CC&Rs are legally binding, they're notoriously hard to change. Doing so requires a vote from all of the board members. If you're on the board, you'll at least have a say in any new regulations being considered.
Don't be afraid to walk away
Lastly, don't be afraid to walk away from a property that's subject to CC&Rs. Often, complying with community regulations can be notoriously tricky, but it will be especially hard if you're not living in the property on a regular basis. To that end, we encourage you to strongly consider a community's CC&Rs before you buy an investment property there. If compliance seems like it's going to be too much trouble, consider your other investment options.
The Millionacres bottom line
At the end of the day, whether to buy a property that's subject to covenants, conditions, and restrictions is a personal decision. That said, even if the answer is no, every investor should be aware of these regulations, what they can involve, and what happens if you don't comply with them. In light of that, use this post as your guide to this type of regulation. Armed with this knowledge, you should have a better idea of whether buying a property in an HOA community or planned unit development is right for you.