Covenants - What you should Know

Covenants, Conditions, and Regulations
(CC&Rs)

CC&Rs are legal terms signifying planned community rules that residents must abide by. The HOA, a non-profit organization, and Georgia law, enforce the regulations. When you purchase a home with CC&Rs, you sign a legally binding contract confirming your commitment to following the rules.

Buyers must understand the CC&Rs before purchasing a property. Every neighborhood’s rules are different, and all require monthly or yearly dues. Maintenance and dues can significantly increase an owner's monthly expenses.

Here are some of the benefits and disadvantages of purchasing a property with CC&Rs.

Advantages and Benefits 

When you purchase a property that falls under legally  signed Declaration of CC&Rs, you agree to abide by those covenants as well as the HOA’s rules and policies in exchange for living in the neighborhood. Residents have to pay fees that go towards the maintenance of the communal features such as the maintenance of walking paths, pools, outdoor lounge areas, gyms, entrance gates/areas and many other features unique to the neighborhood.

The CC&Rs also ensure respectful neighbors. Rules and regulations set behavior standards for your community. If your neighbors fail to abide by the agreement, the HOA will implement various enforcement measures. The rules also give authority to the HOA to ensure the  aesthetic maintenance of  all surrounding properties, such as clean-cut lawns and freshly painted houses.

Most HOAs provide neighborhood security while most utilize a neighborhood watch committee. If you have small children, this may be an appealing feature of the community.

Purchasing a home with real estate CC&Rs grants your family access to the communal amenities. Common features include a fitness facility, sports fields, tennis courts, a clubhouse, walking and biking trails, green areas, and more. Part of your dues pays for the maintenance and upkeep of these amenities.

However, the most appealing benefit of CC&Rs for homeowners is the property value increase.

Rigorous restrictions push more individuals to maintain their property, staying up to date on safety requirements, appliance upgrades, and curb appeal aesthetics. When it comes time to sell your home, you will see the reward of your property maintenance under a reasonably strict HOA.

A rule-based community takes the stress out of neighbor-to-neighbor confrontation. If the house across the street throws a rowdy party until midnight, you can reach out to the HOA, allowing them to handle the situation. Similarly, if you are trying to sell your home and the yard next door is full of children’s toys, you can send a report and allow designated officials to mediate the situation.

Disadvantages

Unlike general property payments, such as mortgage interest or private mortgage insurance, homeowners may not deduct HOA dues on their income taxes. These dues can also increase over time. The HOA has the power to alter the price of resident fees depending on storms, increased maintenance requirements, and more. Some elderly community members rely on a fixed monthly income and may lack the financial stability to maintain price increases.

CC&Rs may require residents to pay for assessments. Heightened operating costs, unpaid dues by neighbors, and damage not covered by insurance will land on homeowners. The rules place further restrictions on residents.

Some communities require additional costs depending on the type of maintenance they conduct. For example, if pests infest the area, the HOA may hire professionals to spray the area. This would be an additional cost outside the established dues, which the association would require residents to cover.

Violation Penalties



 “What happens when I break the rules?”

Violation penalties are real and may cause severe financial devastation. When you break your community’s CC&Rs, you may experience fines, lawsuits, or foreclosure.

If your community’s regulations prevent you from installing a fence or making improvements to your property without permission and you do so anyway, your HOA may take the following steps. They may:

• Present you with a daily fine until you remove the fence.
• Hire a company to remove the fence and charge you a maintenance fee.
• Suspend your amenity privileges, like using the pool or gym.

When the association takes less invasive measures, like those listed above, and the homeowner continues to break their agreement, they may file a lawsuit. The association will present the court with the CC&Rs and ask them to order the homeowner to abide by the rules. If you fail to pay the HOA’s fines, the court may ask you to do so.

If the court issues a money judgment, the association may access the fees straight from your bank account. When homeowners have insufficient funds to cover the dues, the HOA can place a lien on your house. This may lead to foreclosure.

Before placing a lien on your home, the association must notify the homeowner of its intent and document that notice for the court. An unpaid fine or two will not lead to this drastic outcome. For significant violations and outstanding debts, judges will allow the association to utilize a lien.

After placing the lien, the holder (HOA) has the power to foreclose the home.  In Georgia, this process is streamlined and worth reviewing here.  The HOA must first allow the owner a chance to pay off their debts or remedy the violation before initiating the final consequence. The HOA can settle the owner’s unpaid fines with the home’s sale profit. Certain states present the owner with a letter when initiating foreclosure and others post a notice in the newspaper.

To access the covenants for The Overlook, click here.