About 25% of the home owners in the Austin, Texas metro area live in property governed by a Home Owner’s Association (HOA). HOAs are created by developers at the time the project or subdivision was designed as a means to define the community standards for the purpose of protecting property values of the community. They’re most commonly formed for condominiums and planned urban developments (PUDs), a category which includes suburban communities. Here are the keys to understanding HOA’s in Austin.
Means of Transferring Ownership to the Home Owners
HOA’s Articles of Incorporation typically grant developers privileged voting rights in governing the association during its infancy, while providing the means for the developer to exit financial and legal responsibility for the HOA organization, transferring ownership to the homeowners of the association.
This transfer typically occurs after a predetermined number of units have been sold — often two-thirds of the available lots and/or units. Each homeowners association enforces its own governing documents in the form of restrictive covenants, by-laws, architectural guidelines and regulations.
Courts Have Ruled in Favor of Home Owners Over HOA’s in Certain Cases
Until recently, both Federal and State of Texas courts have time after time enforced an HOA’s right to control the use of property within its purview. New rights have been granted to Texas property owners who are governed by an HOA. The first of these rights allows homeowners to install solar energy devices on their property without the interference of HOA authority. Homeowners are also now allowed to display certain religious symbols at the entrance of their property. And, of course, the new Texas rights declare the HOAs cannot prevent homeowners from flying the American, Texas or Military flag.
Typical Restrictions Imposed by HOA’s
Here are just some of the most common restrictions imposed by HOA’s around Austin.
- Boats, utility trailers, RVs, and commercial vehicles may not be parked in driveways and streets
- Homes may not be painted in “loud” or un-approved colors
- Yard signage may not be political in nature, nor defamatory
- Lawn care must be performed routinely to prevent overgrowth
- For condominiums with balconies, towels, clothing and laundry may not be draped on railing
Membership in HOA is Usually Mandatory
Membership in the homeowners association is often a condition of purchase…that is, its membership is mandatory; buyers are not permitted to opt-out (there are some exceptions). Homeowners associations make their by-laws available upon request to existing, governed homeowners and will often make by-laws available to prospective home buyers – for a fee – as well.
Review HOA Rules Before Building or Buying in a Neighborhood
Review community guidelines before buying into a building or neighborhood, and before beginning a home improvement project. It’s important that you know what actions are permissible and what actions are not before you become an owner. In addition, most mortgage lenders require HOA by-laws including financial information as part of the mortgage approval process. Probably the single most common reason why a lender rejects a loan application involving a HOA governed property is financial mismanagement by the HOA Board of Directors.
Not Comfortable with Majority Rules? Maybe an HOA Isn’t for You
Owning a property governed by a Home Owner’s Association is not for everyone. It operates as a quasi-democracy which means majority rule. If you’re not comfortable with a majority vote dictating how you can use your property, what fees you will pay, and whether repairs you seek will be performed in a timely manner, then reconsider. The most common reason owners come to us seeking to sell their condominium or planned development home is they are “sick and tired” of dealing with the HOA and the inherent political and emotional turmoil.
Looking for a Home In or Out of an HOA?
If you’re looking for a home in or out of an HOA we can help save you time and money. We are Realtors specializing in buyer representation and have a combined 50+ years of experience. Check out our Austin Home Buyer Representation Program to learn how we’re different. Then call us at (512) 827-8323, email us at info@11OaksRealty.com or fill out our Buyer Survey to schedule a no obligation consultation.