The rules and regulations for homeowners’ associations can vary widely so it’s vital a home buyer reads the documents before signing.
When you are buying a home in Delaware, the chances are it is part of a homeowner association. Most new home communities, condominiums, communities with a clubhouse and amenities, or planned communities with a mix perhaps of single-family homes, townhomes, and condominiums have one or more associations with deed restrictions and by-laws.
As this trend evolved in Delaware, the state introduced procedures requiring disclosure of all restrictions as well as the financial health of the associations. The objective was to make sure home buyers are given a complete set of these documents to read and agree to as a contingency of your contract to purchase the home.
The Delaware Uniform Common Interest Ownership Act (the DUCIOA)
The Delaware Uniform Common Interest Ownership Act or DUCIOA authorizes and governs many requirements and options for common interest communities. (Although commonly pronounced to rhyme with “sequoia,” many real estate professionals, pronounce it so that it sounds like “Duke-Iowa.”) It contains detailed requirements, rights and responsibilities of the developer, the community’s owners’ association, and the homeowners and residents. Since September 30, 2009, the DUCIOA governs common interest communities unless they have fewer than 20 units, or the declaration says the annual assessment cannot exceed $500 (increased by 3% per year thereafter).
By law, the seller must provide the DUCIOA to you, the buyer, within a timeframe specified in the Agreement of Sale. From the time of receipt, you have a specified number of days, usually 5 days, to review, ask questions, and approve these documents or not. If you do not, then you may declare the contract null and void and request your deposit be returned.
Read the documents!
These documents protect home buyers in the same way inspections do. Don’t just sign these documents without carefully reading them. This is the only way you can decide not to proceed to purchase a home once you have an executed contract. For some communities, there are many pages to review, but it’s important to read every page of the documents.
I just received an email from one of our local Delaware custom builders, and I am sharing it with you here. I could not say it better myself.
Homeowner Associations – Your Ally
It surprises some home buyers, especially first-time buyers, that a homeowners’ association is in place, and buying the property is not possible without agreeing to the deed restrictions and by-laws of said association. Further, it surprises them to learn those restrictions are enforced and homeowners cannot just add a purple door or a large play fort in the back yard, or build a pool over, or even near, an easement, etc.
But homeowner associations, which developers and builders alike must work with and adhere to similar restrictions, can be the home owner’s ally.
Home Owner Associations (HOAs), over 300,000 of them in the United States, cover all types of property types, both single-family detached, attached and multi-family, including townhomes, custom homes, production builder homes, condominiums, gated neighborhoods, harbors with boathouses. Some are small (2-3 homes) while others might be covering master-planned communities or entire villages (small town size). Regardless, they serve a purpose. While they may seem like a hassle, to the buyer or the builder, most owners, by far, enjoy the protection afforded by the deed restrictions and by-laws.
The rules and regulations can vary widely, so it is important to understand them before any purchase. We can help with that. If you have issues you think might be relevant, or an issue, let’s discuss those. Some examples that may violate the deed restrictions include parking multiple cars, operating a for-profit enterprise out of the home, limiting the number, and type, of animals, what the land or residential construction may be used for, even the age of the occupants, in some cases.
HOAs are also known as property owners’ associations, community associations, condominium associations, or other names. Again, we can help you with this, whether you are buying a unit already built, or you are considering building a unit, of any type, anywhere. Keep in mind, depending on your construction project, there may also be permits and environmental restrictions or possibly even restrictions related to the construction science (earthquakes, floods, etc.).
Generally speaking, even if you read about complaints online, most consumers like HOAs because they help maintain all types of standards, which in turn, protect property values.
Another big benefit you the homeowner will most likely have in an association is a shared benefit, and shared cost to maintain, common areas such as swimming pools, sometimes the roads themselves, street lights, clubhouses, gym(s), green spaces, detention or retention (water) ponds, parking lots, tennis, and pickleball courts, not to mention other shared expenses such as trash collection, snow removal and more. These elements are often paid for through the association dues, which may be annual or monthly. These dues are assessed thereafter in accordance with how the homeowner association board of directors and the homeowner association management company (if any) manages the accounting.
If you have more questions about Homeowners Associations in Delaware or any related real estate issue, contact one of our Active Adults Realty Agents today!