Buying a new home can be an overwhelming process. The amount of paperwork is staggering. When buying property that is part of a homeowners’ association (HOA), the paper work is increased due to a statutorily-mandated set of additional disclosures regarding the HOA (Civil Code Sections 1365 – 1368 and 1375). In this second installment in this blog series, I will discuss some of the more important issues to look out for in the HOA disclosures.
One of the vital elements of the HOA disclosures is the Covenants, Conditions, and Restrictions, commonly known as CC&Rs. The CC&Rs contain the rules that govern the HOA, and some of the things you might find the in CC&Rs could impact your decision to buy the property. A previous blog discussed potential restrictions relating to improvements to your home. However there are several other potential pitfalls to look out for when reviewing CC&Rs.
Restrictions on Use of the Property
Many CC&Rs include specific restrictions on the use of the property. These restrictions frequently seek to limit use of the units for residential purposes only. This oftentimes means that an owner cannot use his home as an office.
Additionally, many CC&Rs have specific rules regulating renting or leasing of the unit. It is common to require all leases to be for a minimum term of one year, require the owner to ensure the tenant understands and follows the rules for the HOA, and to provide the HOA with a copy of the lease. Some CC&Rs go as far as to prohibit leasing all together, or prohibit leasing for more than a few weeks in a year.
Some CC&Rs even require that units be used solely as a dwelling for a “single family.” The case of Colony Hill v. Ghamaty deemed this to be an acceptable provision and determined that an owner who was renting his unit out to unrelated, short term tenants was in violation of the CC&Rs. Please note, that with the emergence of “Airbnb,” many HOAs are looking into instituting restrictions to prevent owners from renting units on a nightly or short-term basis.
CC&Rs often regulate whether satellite dishes are permitted, and if so their size and location. We’ve seen CC&Rs that prohibit parking in driveways, or that require garage doors to be closed at all times except when entering or exiting the garage. CC&Rs often limit or prohibit storage of non-vehicle-related personal property in the garage. The range of issues that are covered is endless.
Restrictions on Use of Common Areas
Another common restriction deals with use of common areas. What comes as a surprise to many is that areas such as patios, porches or balconies can be considered common areas. The CC&Rs may limit how owners can use those common areas, including by preventing them from having BBQs or other amenities and requiring the common areas be kept free of debris or other materials.
Further, most HOAs consider the space between units to be common area. Therefore, the CC&Rs may limit the owners from installing in-wall or in-ceiling speakers or improving or changing the plumbing or wiring within the walls.
Restrictions Regarding Pets
As a pet lover, one important restriction I always look for are those dealing with pets. Many CC&Rs limit the number, size, breed, and types of animals an owner is allowed to have.
Of course, the issues discussed above are among the concerns that clients have raised with us. However, it is critical that a buyer carefully review the CC&Rs for themselves. What may seem insignificant to one buyer may be a deal-breaker for another. Therefore, the above items are not intended to be an all-inclusive list, but instead a guide as to some of the more common issues that have caused concerns.
Brewer Offord & Pedersen LLP review and advise on CC&Rs and HOA issues regularly, and are here to help. If you have any questions about this issue, or any real estate legal issues, please contact us at (650) 327-2900, or on the web at www.BrewerFirm.com.